It’s no secret that making a bad hire is one of the more significant fears hiring managers and the organizations they serve possess. But just how damaging can it be? How much does it really cost your business? How much does it hurt your career if you’re the one responsible for making it?
Furthermore, how much more serious are the consequences of a bad hire as companies emerge from the COVID-19 pandemic and begin to look for new talent?
In short, the answer is probably much more than you think, and, while there’s never a good time for a bad hire, today’s unique economic landscape can make those costs count double.
In this blog, we’ll share some insights and statistics* behind the costs of a bad hire and tips on how you can ensure you avoid making one.
The Hard Data Behind Bad Hires
Few realize just how expensive and far-reaching the effects of a bad hire can be on an organization, or just how often these bad hires occur.
74% of organizations report making bad hires every year.
How these organizations classify their bad hires fall under several different descriptors:
- 58% cite poor quality of work
- 53% cite a negative attitude
- 54% cite producing subpar work
- 50% cite the inability to work well with others
- 46% cite having attendance issues
Regardless of the specific reason that reveals how new hires reveal themselves as bad hires, often, it doesn’t take very long for organizations to realize they’ve made a mistake.
20% of employers report they can spot a poor performer within just the first week.
And this isn’t always just the employee’s fault: 74% of HR professionals admit to making a mistake during the hiring process.
No matter the reason behind making a poor hiring decision, the costs to your business will manifest regardless. And they’re steep.
74% of companies claim that hiring the wrong person costs an average of $14,900 per bad hire.
While that figure may appear steep, and there’s, of course, a level of variance involved depending on the position, experience level, and characteristics of the organization, they can easily eclipse that figure:
- Average costs for organizations with 500 or fewer employees: $11,000
- Average costs for organizations with more than 50 employees: $22,000
- Average costs for organizations with more than 1,000 employees: $24,000
Besides just the measurable financial losses a bad hire causes a company, there are additional symptoms that present themselves as a bad hire works within your organization:
- 30% of companies waste over 50 hours hiring the wrong person
- 39% of employees reported an increase in stress after working with a bad hire
- 33% of productivity is lost when employees need to collaborate with a bad hire
Keep in mind that the above data was gathered before the coronavirus crisis. The current environment, with tighter budgets, leaner teams, and increased pressure, is even less forgiving.
We implore organizations to tighten up their recruiting procedures, refine their interview processes, and approach their screening process with extra scrutiny as they begin to recover from the shutdowns and recruit for open positions again.
Looking to make your next high-impact hire with confidence? Huffman Associates is here to help. Our team of veteran recruiters specializes in management and executive-level recruitment within the financial services industry.
Get in touch with us today to learn how our extensive network of proven candidates and 50 years of experience in search consultancy can help you overcome whatever hiring challenge your organization is facing. *
(all statistics gathered from ZoomInfo study)