How Costly Can it Be to Make the Wrong Hire?

What happens when your new hire is a bad hire? Every employer hopes this isn’t the case, but unfortunately it’s a costly mistake to make. When calculating the cost of a bad hire, you need to take into consideration both direct and indirect costs—and they add up!

Direct Costs of a Bad Hire

When calculating how much a poor hiring choice cost your company, factor in:

  •  The Hiring Process – From advertising an open position to reviewing resumes, interviewing and negotiating an offer—how many hours and individuals were involved to bring the bad hire onboard? Consider their pay per hour times lost work hours.
  •  Training and Materials – How much did you spend on training materials, and how many hours did it take to train the new employee? This could be a week for entry-level positions, or much more for specialized positions. Consider the salary of the trainee, the salaries of the trainers, and the price of materials.
  • Outside Training – Was the new employee trained in-house, or did you need to provide other education? Factor in the cost of this, as well.

Indirect Costs of a Bad Hire

Beyond the initial financial burden, there’s also the drain on your company that paves the way to turnover. This includes:

  • Time Drain on Management – How much extra time did a supervisor or manager spend onboarding the new employee? Consider the salary of that person and how many work hours were lost.
  • Employee Morale – For those employees responsible to pick up the slack as the bad hire underperformed, consider the potential dip in productivity as they were burdened with extra work, negativity, and even conflict.
  • Turnover – Depending on how long the bad hire was with your company, this employee could have led to other employees leaving.

Bottom line—hiring mistakes are expensive!

And it’s important to avoid them. You can do this by improving your hiring process, including efficient resume review, effective interview techniques, and screening.

A Recruiter Can Help

If you’re not sure what went wrong in your hiring process or feel you need support, a staffing partner is a valuable resource. Your recruiter will work with you to assume some or all steps in your hiring process, making it much faster and easier to find the right hires.

Check out LaborMax

We specialize in the placement of light industrial, labor and construction staff. To learn more about our available services, contact us today!