How to Calculate the Cost of a Bad Hire

How to Calculate the Cost of a Bad Hire

Wrong Hire; Costs Involved

When a company starts growing rapidly and the work is overwhelming, the managers start looking for new personnel to handle the excess work. This is mainly done to offer customer satisfaction in whatever means possible. However, making a wrong hire in the company can cost you more than you can ever imagine. Although you might not immediately notice a wrong hire or the person who doesn’t belong, sales and company performance are the first to show.

The bad thing with a wrong hire is that, it cost more than just the money, and can go as far as making the company loose long trusted clients. Recovering from the loss is even more painful and costly. Other costs that come with hiring an unqualified or wrong person for a position include: reduced productivity, time, negative impact on other employees and future clients.

Contributing Factors

What exactly induced companies to make a wrong hire? There are numerous reasons why a company can hire the wrong person. Among the most common reasons could be because the company needed to fill the open positions urgently due to overwhelming amounts of work or even an employee who is not just ready to work. The worst mistake of all comes when the company’s hiring team doesn’t cross check references when hiring, thus hiring persons not qualified for the job.

Curb the Hiring of Bad Employees

If you have already hired people and do not know whom to fire, there are a few ways to identify wrong hires. People not qualified for a job will produce lower results as compared to qualified ones, and will not be willing to work with the others. They inhibit very negative attitude towards everyone and everything causing customer complaints. They do not even meet deadlines even when on tight schedules. Identifying these traits can be easy if you are focusing to reinstating the condition of your company.

The most recommended way to curb unforeseen hires includes:

1. Spare some time to conduct interviews
When conducting an interview, you can rely on the papers presented to you, but most importantly, seek to know the person deep within. Always remember that, people with great personalities and readiness to work can be more productive than a highly qualified person via papers, but lacks moral.

2. Cross check references
Referees are important especially when it comes to inner relations. You should take some time to call a referee indicated in the resume, to confirm the person’s capability to work. Although some may not be willing to talk positively about the interviewee, you should always be able to read in between the lines. Nevertheless, if more than 2 people approve the person’s credibility for his job, you can give him or her time to prove they are worth it. This is the reason why you should place all new employees on probation to see how well or bad they perform.

3. Appreciate recruits by giving them a great first day at work
The very first day at work means a lot for many employees and it will determine how they perform for the rest of their lifetime in the company. If the employee is received warmly on the first day, and is shown the way forward to achieving goals, he or she will start working with the right attitude. Nevertheless, harassing recruits in the first few days of hire can make even the right employee stop working hard and become a bad hire.