For most businesses 95% of the company’s value walks out the door every evening. Finding the right people is one cost, keeping people in their jobs is another, and when you need to terminate a “bad hire” employee, the dollars add up quickly.
A bad hire is defined a person who did not perform up to expectations and/or one who’s skills did not end up being a good fit for the role they were hired for. In a recent survey performed by Career Builder, 42% of companies reported that a bad hire cost them at least $25,000 in the past year, and 25% reported a loss of at least $50,000. FastCompany created a corresponding Infographic for the CareerBuilder survey.
Besides the direct costs of salary and benefits, bad-hire employees contribute to indirect costs in lost productivity/lost sales revenues, ill-will and disruption for customer facing roles, a drain on support teams and then you face the costs to recruit and hire a replacement employee. It’s no wonder hiring managers get a little cynical about finding good people when their attrition percentages increase.
In the aforementioned Career Builder survey, 21% of companies admitted that they hired poorly because they didn’t take the time to properly test and research the employee’s skills. I’ve sat with hiring managers who tell me that they are “on the fence” about a particular candidate and will “try them out for 90 days.” This casual attitude makes me cringe as if I am hearing nails on a chalkboard. If we extend an offer to a person we have a huge responsibility to be their biggest cheerleader, shepherd them within the company and give them every chance to do well. They should be a valued team member, not thought of in the same vein as a rent-to-own RV.
While many businesses may feel like they need to fill a position quickly, it ultimately pays off to take the time to fully vet applicants or wait until better talent is sourced. It will save a lot of money and stress in the long run, and make the company a happier and more productive place to work.