5 things that make a bad hire expensive

In another article, I have listed the 6 telltale signs an employee can turn into a bad hire any time during his/her tenure. It is imperative to establish how and HOW MUCH our poor hiring decision becomes a liability more than an asset.

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Bad Hire: The (Not-S0) Secret costs that strip away Profit

The problem in making a poor hiring decision is the overall cost to your business. The expense is not just in the out of pockets costs, but also in:

• loss of team morale,
• lost time,
• downtime,
• management time,
• and loss of team productivity in covering the gaps.

The cost of making a bad hire has been estimated at anywhere from 30% of annual salary and up to $50,000. Here are the 5 big costs:

1. Impact of the rest of your team. They have to pick up the slack, cover mistakes and tolerate any bad behaviour. Morale suffers and your top performers may leave
2. Impact on Customers. Not fulfilling job responsibilities, taking shortcuts or upsetting customers generally. Your brand and reputation can suffer, and worse, customers may leave.
3. Performance management. A bad hire drains management time and focus on what could be spent on coaching and developing your good performers. Dealing with complaints from staff and customers also takes up management time.
4. Business reputation. If a business has a habit of making bad hires, this will adversely affect the reputation of the business and the manager involved. It also adversely impacts the reputation of your leadership
5. Cost of replacement. This involves recruiting and training costs, management time, loss of productivity and impact of the team both during and after a bad hire leaves.

For more information on how to make better hires and to minimise the occurrence of a bad hire, please contact Neil at 1300Hired.

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