“80% of employee turnover is due to bad hiring decisions.” – The Harvard Business Review.
When it comes to deciding on your recruiting methods and selecting the right candidates, the amount of choices available to you is nothing short of daunting. Unfortunately, making the wrong hiring decision can cost you time and money.
There is a wide disparity about what a wrong hire can cost a company because there are so many variables. But the cost of selecting the wrong person can run into the hundreds of thousands or even millions of dollars, not to mention the potential negative impact to a company’s reputation, morale, and productivity.
Specifically, recruiters have been known to say that a poor hiring decision for a candidate earning $150,000 per year could cost, on average, $375,000, and that expense comes right off the bottom line.
Why Are These Costs So High?
Expenses associated with hiring include interview expenses such as travel, hotel and meals, training and orientation, employment testing, termination costs such as Cobra, unemployment and potential litigation expenses should the candidate decide to sue you for wrongful dismissal, plus relocation costs, and outplacement or career transition costs. But mostly it’s because you need to repeat the entire hiring process to replace the wrong hire, which includes time and expenses.
Why Companies Hire The Wrong Person
Recent surveys show that the top factor leading to a failed hire, aside from performance issues, is a poor skills match. The second most common reason was unclear performance objectives.
“Wrong hiring” often occurs because hiring managers and human resources people confuse the job description with the job criteria. That’s why it’s important to involve those who are actually doing the job in writing the description. Finding the right match requires time and attention to avoid any miscommunication about what’s required to do a successful job.
Making the wrong hiring decision is an expensive choice and may cost you more than you realize, but it is possible to get it done right.