What’s the Real Cost of Bad Hire?


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Every employer today is fighting a war against wrong hires. They never want to lose out on the best talents and resources. They might depend on a few websites and tools to make this happen.

But wouldn’t it be a wrong choice while you invest huge bucks in enhancing your hiring process while your employees end up fidgeting with the bad hire.

Zappos CEO Tony Hsieh estimated that bad hires had actually cost the company nearly $100 million.

Every bad hire is equivalent to a rotten apple. They take pleasure in spoiling the work culture and the mindset of the team members. You can calculate the overall impact as follows:

Quantitative Loss

Every bad hire can bring down the chances of leveraging an organization’s resources productively. You might invest in coaching, training, and mentoring along with disciplinary actions and performance reviews.

Be it spending on administration and designing tools, your overall effort wouldn’t prove fruitful. When the employee leaves, you might have to restart it. This would cost you a lot in terms of financial burdens and loss of productivity.

The average cost of one bad hire is nearly $15,000!

The Undercover Recruiter reports bad hires can cost $240,000 in expenses. Those are broken down into costs related to hiring, pay, and retention.

Additionally, here are three points to consider when trying to determine the cost of a poor hire:

– The higher the position (and thus higher the salary), the higher the cost of the wrong hire
– The longer the ill-placed person has worked at the company, the higher the cost of the bad hire
– The more training wasted on the person, the higher the cost of the bad hire

Qualitative Loss

While any bad hire can imply productivity loss, it is often the good employees who need to compensate for the old and forgotten misgivings. This can pave the way for deprivation among top performers. Remember, this hullabaloo can keep dragging long after the bad employee has left the organization.

Research states that 43% of companies got fizzled up with bad hires since they had to hire a person ASAP.

A bad hire can have a negative impact on co-workers and the team as a whole. If they are in a leadership position, the impact can be much worse. Self-motivation often relies on environmental factors. If the environment is negative, it can be challenging to be motivated at work. A bad hire can make it difficult for a team to meet their goals. That’s because a co-worker or team will be hesitant to work with them and vice versa.

They can impact everything from the cost of screening, assessments, candidate selection, as well as other hiring processes such as technology and travel costs. From exit formalities to severance packages, everything would come under the radar of a bad hire. This can have serious impacts on the overall business culture.

To avoid such unpleasant situations, businesses have to forgo hasty hiring decisions. A bad hire can pose a long-term threat, whereas a good hire can let you win a fortune. Employee background verification can help you make smart hiring choices.

Originally published at Springworks Blog

Pawan Kumar
Hi, I'm Pawan. I'm an Inbound Marketer and Content Creator at Springworks. An Introvert storyteller who loves reading. I’ve been featured on Jeff Bullas, MarketingProfs, Entrepreneur, SEMrush, Social Media Today, and Many More. Don't hesitate to connect with me on social media.


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