The cost of a bad hire
Good hires can be a powerful catalyst for positive change in your business. So it stands to reason that a bad hire can also have a negative impact on your business. Do you know how much bad hires could cost you?
According to a study carried out by the Recruitment and Employment Confederation, a bad hire for a role with a salary of £42,000 can result in a cost of £132,015 for the company! So what makes up this cost?
Cost of lost productivity. How much does the new employee slow down your well-oiled machine? Research from Oxford Economics suggests that it can take an average of 28 weeks for a new employee to get up to speed and produce the same level of work as the person they replaced.
Advertising/recruitment costswhatever route you take there is a cost, advertising yourself may seem cheaper, but it will require many more man hours; go through perhaps hundreds of applications and deal with the unsuitable ones.
Hire freelancers. During the wait time to replace a bad hire, you may need to rely on freelancers for an extended period of time.
Maintenance costs. What is your billable hourly rate, how many interviews take place to hire a person?
HR/Training costs like onboarding, getting a new employee up to speed with technology and systems.
Management fees spend more time and energy trying to bring low-performing new hires up to speed.
While many people focus on the financial cost of a bad hire, the effect on morale and culture is just as important. For what? We all know that one bad apple spoils the bunch, so to speak. When a bad hire does a bad job, good employees burn out to catch up and the longer this goes on, the more risk you have that their frustration will increase and potentially lose good employees. A study from the University of Warwick also reports that happy employees are up to 12% more productive. The effect on company culture can be contagious. Poor performers can lower the bar for other employees, and bad habits can spread like a virus.
Pre-employment assessment specialists Thrive have created a calculator to quickly and simply show how much failed hires would cost your business, why not try it here
Tips for better hiring
- Go with your instinct Often when a hire doesn’t work out, you realize you had concerns or questions all along. The solution is to trust your instincts more and not ignore any warning signs.
- References Take every opportunity to check candidates’ references, talk to the people they have worked for and with. Many companies do not take references or just get a basic reference confirming that he worked at company X from date Y to date Z.
- Date and date again before the wedding Don’t rush into a job offer after just one meeting, take your time to meet with candidates multiple times and in different scenarios. We have known employers who hosted potential senior employees for a dinner, for example. Another option is to hire the candidate for a trial period if possible, which can be helpful for both parties to assess their suitability before committing.
- Set clear expectations Be clear throughout the interview process about your expectations for the role and we always advise quickly setting goals and KPIs for their trial period, once someone has joined the role. Then, if expectations are not met, there should be no surprises on either side if you act decisively and move on. After all, every company and every executive will make a bad hire in their lifetime. There is no magic formula for making every new employee a great employee. But if you hire carefully, it’s also important not to dwell on the mistakes you make when hiring and let things last longer than necessary, to be decisive and cut your losses.
There are several ways to work with a specialist recruiter such as Creative Resource to help you avoid making a bad hire and also mitigate costs…
Our directors have over 50 years of combined experience recruiting for the creative and marketing industry, and our management team averages over 19 years per person. So we know how to reduce your time to hire and can advise you effectively on everything from market conditions, job specifications, salaries to interview training. We pride ourselves on reducing the time you spend reviewing and interviewing candidates.
We thoroughly interview all candidates we represent. Understanding their motivations and ambitions allows us to connect them with the appropriate environments for them to flourish. We will receive a very detailed brief from you and we will want to know the “fit” of your organization so that we can pre-select candidates whose aspirations and character match yours.
We offer a free 3 month replacement if a candidate you hire through us leaves the role within the first 3 months, and we are also willing to offer flexible payment terms, strongly believing in a partnership approach.
Throughout the interview process, we will take into account your and the candidates’ comments and will notify you of issues as they arise. It could be that your preferred candidate has other interviews and you need to rush to get them, even passing on red flags that you missed.
Creative Resource has been in business for 36 uninterrupted years, we have clients who use us exclusively and have done so for years, this is due to the very honest advice and help we give and the successful presentations we make. Our philosophy is the very antithesis of bums on seats.
If you would like to have an informal chat to see if we can help, simply contact our directors Julie or Phil on 0161 477 3221.
The article The Cost of a Bad Hire appeared first on Creative Resource.
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