The True Cost of a Bad Hire — It’s More Than You Think

When you align with the right employee, it adds tremendous value to your organization. Unfortunately, when you hire the wrong candidate, it can drain your productivity, time and budget. To calculate the true cost of a bad hire you should consider the following:

$ Recruitment fees and staff time.
$ Relocation and training fees for replacement hires.
$ The negative impact on team performance.
$ The disruption to incomplete projects.
$ Lost customers.
$ Outplacement services.
$ Weakened employer brand.
$ Litigation fees.
Source: Brandon Hall Group

Several years ago, CareerBuilder conducted a survey about why companies make bad hires. They found that 43% of respondents said they made a bad hire because they felt they needed to hire someone quickly. This sense of urgency happens for several reasons:

  • the current staff may be overextended
  • a project may require new talent
  • a key employee may depart suddenly, leaving a critical hole in the organization

Why do organization’s make bad hires?

Too often, organizations are so anxious to put a body in the vacant position that they overlook a candidate’s flaws and end up hiring someone who really doesn’t meet the needs of the job.

Hiring a bad fit or someone who lacks the skills needed to perform well has the potential to leave good employees with the burden of damage control. Be it extra work or redoing work that wasn’t completed correctly the first time, this added pressure on your top performers could put you at risk of losing them, too.

When a hire doesn’t work out, you often realize you had concerns or unanswered questions all along. The solution is to put more trust in your instincts. That’s easy to say but difficult to do when you’re filling a critical position.

Background checks are also very important. Take every opportunity to check candidates’ references – both previous supervisors and peers. References are invaluable resources that prevent costly mistakes.

We’ve learned that when it comes to hiring, red flags always mean something. Few applicants outright lie about their background and experience but most bend the truth by expanding their background, job experience, titles and education.

The best way to get at the truth is by being able to ask the right questions. When you treat recruitment with the reverence it deserves, the odds of you making the right hire increase exponentially.

Download this Excel spreadsheet to calculate the cost of employee turnover including, training, replacement and lost productivity: Bad Hire Calculator

How We Help

As partners and trusted confidants to nonprofit organizations across the country, we provide our clients with candidates who are qualified, vetted, and prepared to impact the bottom line for their new employer quickly. If you would like to speak confidentially about our search methodology, you can contact one of our associates here.