One in three HR decision-makers in the UK believes hiring mistakes cost their business nothing. Maybe that’s why one in eight admit that their company has made a bad hiring decision. Clearly, as a nation we’re lazy about our hiring processes - and that needs to change, because the true cost of a bad hire is exponentially steep.
In today’s competitive market, it’s never been more important to take the time to vet potential employees properly. Of course, there’s a cost to making a good hire too - so how much should you invest in the process, and what can you do to make it pay?
What does a good hire cost?
Recruiting good employees takes a lot of time, effort, and money. There are physical hiring costs (like advertising, agency or referral fees, and headhunting) as well as time spent by senior staff interviewing candidates instead of doing their usual jobs. Hiring a mid-level employee costs ten to twenty hours of managers’ time - and then it takes the newbie an average of three months to get up to full speed on the job, which means productivity costs too.
Taking all this into account, making a new hire can cost a business up to £50,000.
What does a bad hire cost?
The cost of a bad hire is much higher. Hiring the wrong candidate for a mid-level management role can cost a business up to £132,000 - and that’s before we get into the costs to the performance of the business itself.
Once the wrong person has been hired, you’ll lose more money and management time replacing them - and when you do, it’ll give the impression that you have a high staff turnover. That’s bad news for your reputation and for staff morale, as they’re likely to wonder who’s for the chop next.
To find out how much bad hires are costing your company, check out Projectus Consulting’s Bad Hire Calculator. Our unique calculator uses the latest algorithms to work out what the true cost of a bad hire is to your company. On average, the true cost is roughly 3.5x their annual salary.
How to get it right
Don’t worry - there are things you can do to solve these problems and create a process for attracting the right people with a minimum of hassle. A robust interview process, staff recommendations, and getting yourself a quality recruitment partner you can trust to deliver an excellent service are all great ways of ensuring you only hire the best candidates.
No matter what vacancy you’re trying to fill, making good hires and avoiding bad ones is crucial to the success of your business. Given the potential impact of a new recruit, it’s always worth investing the time and money to get it right, instead of hiring in haste only to repent at leisure.