How Much Does a Bad Hire Cost Your Company?

April 24th, 2020

When you post an open position and start interviewing candidates, you hope for the best. But are you prepared for the worst? Have you calculated the actual cost of a hiring mistake? If you haven’t done this yet, this simple move can show you the stakes before you gather data that can help you make your decision.

If the stakes are low, that means the position is low-responsibility, or low-salary, or very short term, or all three. But most positions don’t fit into even one of these categories. Here are costs to factor into your hiring plan.

A bad hire leaves before ramping up.

If you hire someone who can’t handle the role or isn’t happy in the job, they’ll probably be gone (voluntarily or otherwise) before they’ve had time to fully complete their training and start making meaningful contributions to the company. This typically happens within about one year, so a hire who leaves before one year hasn’t fully made up the cost of the hiring process. Not only do they not provide a return on their expensive training or make up for their potentially expensive rookie mistakes, but they take the value of that training and those mistakes to their next employer, who may be a competitor.

A bad hire can disrupt the social fabric.

When a new employee arrives on the scene, the person gets to know his or her teammates, earns trust, and makes friends. But then…she leaves. When she goes, she pulls threads from the fabric of social continuity, leaves uncertainty about who might arrive to fill her place, and forces everyone on the team to start again from scratch with someone else. If the new hire alienates others and undermines trust before leaving, that’s even worse. In the best-case scenario, you hire someone who gets along and builds rapport with the team, then stays long enough to become a valued member of the workplace “family.” In the worst case, he arrives, departs, and leaves a trail of expensive social chaos in his wake.

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