Hiring the wrong person is one of the most common and costly mistakes made by companies. Even though larger businesses typically have human resources divisions that handle the hiring process, it is still possible for a poor hire to be made. It can cost anywhere from 30 to 100% of an employee’s annual salary to replace a bad hire, depending on the level of the position. To give you an idea of how costly and damaging even one hiring error can be to your company, here are just a few unexpected costs associated with a bad hire.
Interview and Training Expenses
The hiring of a new employee represents a financial commitment to that person’s future success in the company. This typically entails conducting interviews, which can quickly add up in terms of time and money. When you factor in the cost of orientation, any required certification courses or programs, and any on-the-job training, it’s easy to see how quickly training costs can add up. While all of these are necessary for a new hire to become productive quickly, if you’ve made the wrong hiring decision, you’ve squandered valuable resources that will still be required for the replacement.
Costs of Lost Productivity
When it becomes apparent that a new hire is unable to perform to the standards of your company, managers are forced to spend their valuable time retraining and training the employee, which reduces productivity for both the bad hire and the senior supervisors. Additionally, bad hires frequently lead to lower sales, which are additional costs to add to the overall loss of productivity.
Damage to Your Company’s Reputation
A poor hire may lead to negative reviews of your company or brand from current employees on websites, forums, and social media platforms. Depending on the severity of the reviews, the volume of reviews and engagement your business typically receives, it may take several months to almost a year to generate enough positive content and reviews to offset the negative ones. If you don’t typically get many reviews, the damage may be difficult to repair. These negative reviews not only damage your reputation in a general sense, but they can also cost you top talent who decline job opportunities at your company because of the negative reviews, creating a vicious cycle in which you are unable to attract the talent and skill sets you require.
If you’re having trouble finding qualified candidates or making the best hiring decisions, look no further than the experts at the Business of HR to serve as your trusted advisors and recruiting support team.