Hiring the right person for your business has a hugely positive impact on your workforce and business, however, bringing the wrong person in can be very disruptive, can drain your productivity, time and ultimately affect the bottom line.

A global survey, carried out for CareerBuilder and including more than 6,000 hiring managers and human resource

professionals, found that a huge number had hired someone who turned out unsuitable for the job or did not perform well. This always had a negative impact on their business in terms of loss in revenue, productivity and challenges with employee morale and client relations.

According to the U.S. Department of Labour, the price of a bad hire is at least 30 percent of the employee’s first-year earnings. For a small company, a five-figure investment in the wrong person is a threat to the business.

As a general rule of thumb:

• The higher the position whin the organisation (and thus higher the salary), the higher the cost of the bad hire
• The longer the ill-placed person has worked at the organization, the higher the cost of the bad hire.
• The more training wasted on the person, the higher the cost of the bad hire.

What are the costs of a Bad Hire?

• The average cost of a bad hire is calculated as 30% of the employees first year earnings.
• 10% of sales opportunities are lost.
• Hiring the wrong person can cause a 36% drop in productivity.
• Hiring a replacement is time consuming, causing 40% lost time, recruiting and training the new person.
• It can disrupt the team dynamics and has potential to cause a 32% drop in employee morale.

If bad hires cost so much money, why do they keep happening?

The researchers at the National Business Research Institute found the following:

10% of respondents said that they just don’t have the resources to go through applications looking for the best candidates. But the number one reason, 43% of companies made what turned out to be a bad hire: They needed to fill the job quickly and as a result offered the role to the wrong person.

How not to make the wrong hire

• Preparation: Write an honest and detailed job description, so that the business and potential candidates know exactly what the role entails.
• Dedicate Time: Be prepared to dedicate time to making the right hiring decision.
• Interviews: Assess the candidate against specific criteria that is essential for the role. Evaluate not only their skills and experience, but also whether they’re a good cultural fit for the company.
• Background Checks: Take the time to take thorough references
• Select and invest in the correct, specialist recruitment partners: Saving money by going for the ‘cheapest option’ or not investing the time in a proper briefing could end up costing you a great deal more in the long run.  An expert recruiter should know exactly the type of person who would fit the role. They may already have a shortlist of suitable candidates for you to choose from, saving you time, and allowing you to get on with your day job.  Leave the recruitment to the experts!

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