The Costs Of A Bad Hire
Everybody makes mistakes in business however the costliest mistake you can make is the cost of a wrong hire!
According to Forbes and in the words of Peter Drucker, “The toughest decisions are people decisions: hiring, firing, and promoting people. They receive the least attention and are the hardest to ‘unmake.'”
The Recruitment & Employment Confederation (REC) chief executive Kevin Green says:
“Our calculations show that UK businesses are wasting billions every year because of the volume of hiring mistakes being made.” “We discovered that employers are completely underestimating the financial impact of getting recruitment wrong, and not learning how to improve.”
The question is, after realising you have made a bad hire – Do you persevere and hope that your under performer eventually steps up? Or do you cut your losses and re-recruit?
According to REC “1 in 3 HR decision-makers whose business hired the wrong person for a manager, director, or senior official role think it cost their business nothing.” Although it is difficult to measure the exact costs of hiring the wrong employee, you can be almost certain it will affect your business in more ways than just the replacement fee.
REC, in their ‘Perfect Match’ Survey found that a poor hire at Mid-Manager level with a salary of £42,000 can cost a business up to £132,000. This cost was generated by: wasted salary of employee, wasted training, recruiting and training a new employee, lost productivity of new employee, lost productivity of team and staff turnover. If these incorrect recruitment decisions continue, the repetition of this process can be extremely costly and time consuming for a business.
Overall, taking the time to cast a wider net and doing your due diligence in selecting employees is well worth the effort and will minimize the chances of a bad hire. When under pressure to hire, interims can be sourced to deliver flexible and cost-effective transformation solutions at speed and they offer an alternative solution to avoid impulsive hiring of a permanent member of staff. Finding a permanent member of staff should be considered carefully with a planned and professional recruitment process. In short – never compromise!
By Bethany Robb – Senior Administrator & Marketing Associate