What’s the True Cost of a Bad Hire?

What are bad hires costing your company? How do you ensure that the individual you’ve hired is a good fit for your company? One good way is contract and contract-for-hire workers. These individuals are vetted by the employment agency and can be hired on as temporary workers to ensure a good fit within your company’s dynamics. What do bad hires cost your company? Read on to find out more.

They may not have experienced the type of PR

nightmares that Netflix experienced from its ill-

conceived decision to launch Qwikster or Yahoo!

Inc. saw after firing CEO Carol Bartz over the phone,

but two-thirds of American companies say they’ve

made business mistakes this year they wish they

could take back. Those mistakes, according to a new

survey, came in the form of bad hires, the results

of which ended up costing them in more than just

bruised egos.

According to a new CareerBuilder survey on the

cost of a bad hire, 69 percent of employers reported

that bad hires lowered their company’s productivity,

affected worker morale and even resulted in legal

issues.

Forty-one percent of companies estimate that a bad

hire costs more than $25,000, and one in four said it

costs more than $50,000.

While some mistakes are beyond the hiring manager’s

control, there are ways to avoid hiring the wrong

person. “The more thoroughly the candidates are

vetted, the less likely they will be a poor match,” says

Rosemary Haefner, vice president of human resources

at CareerBuilder.

Haefner advises employers to allow job candidates

the opportunity to meet as many employees in the

department as possible – especially if they will work

closely together. Also, candidates should provide

ample evidence to show they have the skills and work

experience required for the position.

Hiring misTakes Happen…BuT WHy?

When asked to give a reason for the bad hires, an

estimated 34 percent of employers attributed the

mistake to the fact that sometimes things just don’t

work out. A rushed decision, however, topped the list

of reasons companies gave for making a bad hire.

38 percent of employers said they needed to fill

the job position quickly.

21 percent say insufficient talent intelligence

contributed to bad hiring decisions.

11 percent didn’t perform reference checks (a

commonly undervalued part of the hiring process,

according to Gilt Groupe CEO Kevin Ryan.)

The price of a bad hire: It’s more than just money

The price of a bad hire adds up in variety of direct

and indirect ways. For example, 9 percent of

companies said bad hires result in legal issues and

11 percent said they result in fewer sales. The most

common effects of a bad hire are:

Lost worker productivity: 41 percent

Lost time to recruit and train another worker: 40

percent

Costs associated with recruiting and training

another worker: 37 percent

Negative impact on employee morale: 36 percent

Negative impact on client solutions: 22 percent

How bad is bad? Characteristics of a bad hire

When it comes to what makes someone a bad

hire, employers reported several behavioral and

productivity related problems:

Failure to produce the proper quality of work: 63

percent

Failure to work well with other employees: 63

percent

Negative attitudes: 62 percent

Immediate attendance problems: 56 percent

Subject of customer complaints: 49 percent

Failure to meet deadlines: 48 percent

Can Bad Hires Turn inTo good employees?

For more tips on how to avoiding hiring mistakes,

check out the recent interview with Hire with Purpose

author Jay Goltz. Wondering whether to fire or try

to fix an employee? Get insight from this recent

interview with management expert Anne Loehr,

author of Managing the Unmanageable: How to

Motivate Even the Most Unruly Employee.

This can be found at http://thehiringsite.careerbuilder.com/2011/12/16/true-cost-of-a-bad-hire/