How Much Does A Bad Hire Really Cost?
February 22, 2017
Hiring isn’t easy. So when a position has been vacant for some time and you are anxious to fill the position, it can be enticing to hire someone who is just an OK fit or who’s even a bit under-qualified. The danger is, hiring someone who’s not quite right for the job can have a pretty bad impact on you, your company and the rest of your team. According to an online survey of over 2,000 HR specialists and hiring managers, 69% of companies experienced costly bad hires which cost them up to 5 times a bad hire’s annual salary. The survey also reveal that the higher the position and the longer the previous person remained in that positron, the more it would cost to replace him/her.
The cost of a bad or wrong hire includes more than just the annual salary of the employee. It includes the HR staff costs; the interviewing costs; the training and orientation costs; the relocation costs as well as the costs for advertising the position in various newspapers or job websites. If an employee is fired and decides to sue the company for wrongful dismissal, potential litigation expenses would also be involved.
But, it’s not all about the money. Hiring the wrong employee can indirectly impact on other employees and your entire business which could also lead to customer dissatisfaction; loss of sales; reduced quality of products/services; low morale and increased workload on all other employees. Also, when the person is ultimately terminated, there’s always a disturbance or rumours among other staff, questioning what caused the termination, etc.
According to a survey by Harvard Business Review, 80% of employee turnover is because of bad hiring decisions. Here are some reasons that lead to bad hires:
1. Urge to fill the job position quickly
2. Inadequate talent intelligence
3. Poor sourcing techniques
4. Unqualified recruiters to assist in screening and evaluating applications
5. Failure to perform reference checks
6. Lack of strong employment brand
7. Job roles and responsibilities (particularly for new positions) not clearly defined
8. Mismatch of skills and salary expectations
9. Failure to blend into the work environment or culture
With all these issues, who exactly is a bad hire?
A bad hire can be defined as someone who has poor work performance, inability to work well with other employees, having a negative attitude, and attendance problems, getting complaints from customers and failure to meet deadlines, etc.
One should also consider that bad hires are not just employees who were recently hired and quit within 6 months. They also include employees who are still working in the company for years but who have become lazy or incompetent and are becoming a liability to the company’s growth and productivity. And the longer they stay the more it will cost the company in the end.
Recruitment can be a very complex task if not done professionally. Many employers worry about making recruitment mistakes and therefore take the prudent step of turning to professional recruitment specialists to help them achieve better results. So, why not let Ikon Executive Solutions (IES) help you interview and hire the right candidate for any job openings that you have for senior to mid-management staff.
IES’s extensive database of qualified candidates for a variety of jobs can make the process less time consuming, costly and frustrating. IES can save you money and time. We have files of pre-screened qualified applicants who can be referred to you immediately. This saves you the time and energy of reading countless resumes carefully, checking facts and interviewing unqualified applicants. Building an on-going relationship with IES gives you the added advantage of having us inform you about highly qualified candidates who become available even when you do not have an immediate opening. IES doesn’t charge you a fee unless you hire the person and that person starts work with you so there is no risk at all on your part. IES also guarantees to replace staff they have placed with you.
Looking for high caliber executives to strengthen your team? Look no further than IES, a top executive search firm in the Philippines! Call us today at +632-551-1843.