How Much Money Does a Bad Hire Cost? You’ll Want to Sit Down| August 13, 2015| Managers
Many employers don’t realize the actual cost of replacing staff. A high employee turnover rate can be the death knell of a company. The most efficient way to avoid high turnover is to minimize your bad hires.
Replacing a bad hire requires reopening a job search as well as conducting the training process again to orient new employee(s). Both take time and are costly. Furthermore, a bad hire can potentially cost a company in terms of expenses such as Cobra, unemployment insurance and legal fees, if the former employee decides to take legal action after being terminated.
In some instances, eliminating an employee can translate into poor employee morale, client dissatisfaction, lost sales, decreased quality of service and reduced efficiency.
The Department of Labor estimates that the total cost of a bad hire can range from one-third of a new hire’s annual salary; to as high as five times of the bad hire’s salary which was calculated by the Society for Human Resources Management (SHRM).
What Constitutes a Bad Hire?
Surveys conducted by employment specialists concluded that more than one-third of executives report a poor skills match as the reason for a bad hire. Thirty percent of executives surveyed expressed that a poor job description led to an even poorer hiring decision.
Managers and executives from various industries stated that a cultural-personality mismatch often leads to poor hiring decisions. Unfortunately, this type of problem can’t be solved by merely reading a jobseeker’s resume. Furthermore, many hiring managers report they select candidates based on a ‘gut’ instinct or a connection they had with the candidate after meeting them. Only after that person is hired do these managers discover their new employee is not a good fit.
Avoiding a Bad Hire
One of the best ways a company can avoid hiring the wrong person is to work with a talent acquisition company such as Long Island Temps. They are experts in assessing a candidate’s competencies, character and culture fit which in turn reduces the odds of a job-skills mismatch. Candidates develop working relationships with talent acquisition teams thereby lowering the chance of a bad hire.
When entering into the hiring process, set yourself up for success by refining and updating the job description. Often, consulting with other employees who perform the same tasks will ensure you include the right skill set as well as the primary requirements of the position.
During the interview process consider candidates’ soft skills, such as leadership, teamwork and communication abilities. Candidates who excel in these areas are more likely to excel in a range of collaborative environments.
Connect with your interviewees. If you identify a highly skilled candidate make an attractive offer commiserate with their abilities. Top candidates are always worth more than you compensate them; however they are destined to add significant value to your company.
Long Island Temps takes the guesswork out of the hiring process while minimizing the odds of a bad hire. Contact us today so we can partner with you in determing the right candidate match for any of your staffing needs.