Posted by Jill Rose on May 22, 2019 10:00:00 AM

We don’t ever want to take a “gloom and doom” voice hereon the Perceptive Recruiting blog. However, there are times when it’s best to be blunt, and the topic of bad hires certainly calls for candor.

There are online calculators and resources available to help you determine just how much individual bad hires can cost your business, but those tools are more diversions than anything. They can scare you into taking action, but they do nothing to help you prevent making bad hires again in the future.

Making bad hires costs your organization significantly.

Hiring the wrong employee brings with it a myriad of costs, all of which can make a tremendously negative impact on your organization. Let's breakdown two of the biggest costs associated with hiring the wrong employee: 

1. Literal salary, benefits, recruiting and on-boarding costs

Salary, benefits and hiring expenses usually come to mind first when we think about the cost of hiring the wrong employee. There’s the time spent creating and posting job listings, sifting through resumes, making calls, conducting interviews and background checks, and performing any technical assessments. And as we know, time is money. Companies also invest in paperwork, technology, training and more during the on-boarding phase.

Of course, we can’t forget the actual salary and benefits package you may have extended to this (now former) employee. Generally, estimates show that these costs are between 1.3 and 1.5x that employee’s salary. So for example, the cost to make a bad hire and onboard a mid-level software developer could be anywhere from $90,000 to $105,000+.

And that’s just for one bad hire.

2. Lost productivity and decreased morale

The intangibles can be difficult to quantify but are nonetheless important to consider when you think about the cost of making bad hires. Whether a bad hire is a poor cultural fit, doesn’t quite have the right skills, or is just a “bad” employee for any number of reasons, the impact of this employee isn’t limited to his or her contributions. The bad hire can impact the productivity and morale of an entire team or department.

First, there’s a period of time where others “pick up the slack” to help the bad hire succeed. There’s also the time spent training new hires and acclimating them to the team. These time investments take your other IT team members away from their most mission-critical tasks.

When a bad hire does poor or underwhelming work, stress builds for the rest of your team as they are forced to rework tasks that were not done properly. Consequently, productivity plummets.

Depending on the time necessary before for you to take action and remove the bad hire, you may even see your retention rate negatively impacted as you lose valuable members of your team!

Reduce costs and make better hires

The most obvious and simplest way to avoid unnecessary costs stemming from poor hires is, frankly, to avoid making bad hires. Recruiting and making hiring decisions are in many ways a combination of art and science. Many businesses find it difficult to avoid bad hires altogether.

In fact, your company may have chosen a staffing agency in the past to reduce that risk while saving you time and money, but it’s important to realize that all staffing and recruiting firms are not created equal.

The Perceptive Difference

At Perceptive Recruiting, we’ve built a team of experienced HR, recruiting, and tech experts who understand the challenges facing your business, and can identify the right talent to solve them. As your strategic partner, we focus on solving problems through exceptional talent.

We’ve built a strong network of IT and engineering talent that knows and trusts Perceptive Recruiting will only recommend them for the best potential opportunities. That means when we recommend someone to you, you can trust that they are qualified and ready to hit the ground running.

Reduce your costs, increase productivity and ultimately achieve your business goals by making smart hires with Perceptive Recruiting. We’d love to learn more about your business. Contact us to get started by clicking the banner below! 

New call-to-action

Topics: Advice for Managers

Subscribe to Our Blog

Recent Posts