The True Cost of a Bad Hire – It’s More Than You Might Think

A disgruntled employee can be contagious, killing the enthusiasm of others.
A bad hire’s poor productivity lowers the bar for the rest of the team.
A bad apple is detrimental to the company culture as other’s pride and esprit de corps begin to erode.

The question about the true cost of employee attrition gets the Human Resources community engaged in the discussion like few other topics can and that is no surprise. Few other challenges facing enterprises large and small have the kind of potential for critical impact on operations as does the turnover of the staff.

                                                                                                 

The US Department of Labor estimates that the cost of a bad hire is a minimum of 30% of the new hire’s annual salary. A small business owner, hiring for a key position paying a salary in six figures can ill afford to get it wrong. An investment of that size in the wrong candidate is a threat to the very life of the business.

 

The same challenge at a large company is multiplied because there are many key positions to be filled and more opportunity to get it wrong. As a matter of fact, Zappos CEO Tony Hsieh once estimated bad hires had cost the company “well over $100 million.”

 

The potential damage sustained by a company, big or small, can be an incredible financial burden carried by a company actively onboarding new staff. As astounding as those numbers are, it’s not the complete picture of what it costs a company hiring the wrong candidate. It doesn’t account for everything.

 

THE REAL COST OF HIRING THE WRONG CANDIDATE

 

While it is the most quantifiable, the financial impact is not the only way the wrong candidate costs the company. A bad hire’s attitude and lack of productivity is far more detrimental to the to the business than money.

 

A disgruntled employee can be contagious, killing the enthusiasm of others.

A bad hire’s poor productivity lowers the bar for the rest of the team.

A bad apple is detrimental to the company culture as other’s pride and esprit de corps begin to erode.

 

Even a wrong hire without an attitude is affecting the company in the same way as poor productivity causes diminished enthusiasm and team pride.

 

The cost of onboarding new staff is staggering when you get it right, but the anticipated ROI realized by installing the right people in the right places makes the investment a good one.

 

The cost of onboarding the wrong candidate can send ripple waves of poor morale and counter productivity across the water for a long time after the stone is thrown. The cost of getting it wrong is much too high a price to pay.

 

Allow Kunze Analytics, LLC the opportunity to show you how we can help you get your staffing right every time, sending your ROI skyrocketing.

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