Vincent Nero http://ebiinc.com 2m 597 #badhire
The views of this article are the perspective of the author and may not be reflective of Confessions of the Professions.
Hiring Costs Of Bad Hires
A bad hire can end up being more than just someone who doesn’t fit the job. It can become a productivity sinkhole, a source of added stress and a potential loss of customers. A CareerBuilder survey found that 75% of employers say they have made a bad hire.
Here are some of the things they say went wrong with those employees:
- Didn’t produce the proper quality of work: 58 percent
- Had a negative attitude: 52 percent
- Didn’t work well with others: 51 percent
- Skills did not match what they claimed when hired: 49 percent
- Immediate attendance problems: 45 percent
Whether or not you’ve experienced these in your job (hopefully not) you can see why it doesn’t pay to skimp on the hiring process.
EBI put together an infographic that outlined to costs associated with a bad hire. The overarching theme is that it is expensive. An estimated average cost for employee turnover is about one-fifth of their annual salary. For higher paying positions, like executives, it gets much much higher. One study found that it costs over 200% of an annual salary to replace a C-Level position.
While staff-level positions can take up to 5 weeks on average to fill, managerial positions can go over to 7.5 weeks or almost two months. When you factor in the lost productivity in those interims, it can get extremely expensive.
There are other things to consider when looking at the repercussions of a bad hire.
- Weakened employer brand
- Litigation fees
- The negative impact on team performance
- The disruption to incomplete projectsh
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Cost of a Bad Hire
75% of employers say they have made a bad hire
What constitutes a “bad hire”
Here are some things that have gone wrong with employees according to a Careerbuilder survey:
- had a negative attitude 52%
- didn’t produce the proper quality of work 58%
- didn’t work well with others 51%
- skills did not match what they claimed when hired 49%
- immediate attendance problem 45%
Costs of a poor performer
Theft and fraud
- $65,000 is the median damage caused by employee fraud
- 43% of lost revenue can be attributed to employee theft
Loss of customers due to bad service
- 62 billion dollars lost per year from poor customer service
- 59% of customer stopped buying after a poor customer service interaction
- 95% of people who had a bad customer service interaction share that bad experience with others
- $450-$550 billion in productivity is lost each year in the U.S. Due to unhappy workers
- roughly $500 billion is lost each year in the U.S. Because of workplace stress due to loss of productivity, absenteeism, and employee turnover
- $3,600 per year for each hourly worker
- $2,650 each year for salaried employees
How much does it cost to hire a replacement?
The estimated average cost for employee turnover is about one-fifth of their annual salary.
- lower-paying jobs (<$30,000) 16% of annual salary
- mid-range jobs ($30,000-$50,000) 20% of annual salary
- high range jobs ($50,000-$75,000) 21% of annual salary
- executive positions ($100,000+) 213% of annual salary
It takes 5 weeks to fill a staff level position
It takes seven and a half weeks to fill a management position
Job board advertising (rates for 30 Day postings)
- Craigslist $75
- Simply Hired $99
- Monster $375
- LinkedIn $495
- CareerBuilder $419
$293 is the average rate
Training cost for replacement tires
- training new hires cost $984 on average
- small companies (<1,000 employees) $1,238 per employee
- midsize (1,000-9,999) $812 per employee
- large ($10,000+) $903 per employee
You may also considered doubling this amount since you will have to retain the person you just hired
Other things to consider
- weekend employer brand
- litigation fees
- the negative impact on team performance
- disrupts ongoing projects