Most of us know that a bad hiring decision can be costly. But just how much does it cost? Check out This article by Mary Lorenz of CareerBuilder and then consider how you can avoid the pain of a bad hire by using BarryStaff’s Temp-to-Hire program. It allows you to take the employee on a 90-day “test drive” before you stick your neck out and put them on your payroll.
How Much Does a Bad Employee Cost The Boss?
By Mary Lorenz
They may not have experienced the type of PR nightmares that Netflix experienced from its ill-conceived decision to launch Qwikster, or Yahoo! Inc. saw after firing CEO Carol Bartz over the phone, but two-thirds of American companies say they’ve made business mistakes this year they wish they could take back. Those mistakes, according to a new survey, came in the form of bad hires, the results of which ended up costing them more than just bruised egos.
According to a new survey by CareerBuilders 69 percent of employers reported that bad hires lowered their company’s productivity, affected worker morale and even resulted in legal issues.
Forty-one percent of companies estimate that a bad hire costs more than $25,000, and 25 percent said it costs more than $50,000.
While some mistakes are beyond the hiring manager’s control, there are ways to avoid hiring the wrong person. “The more thoroughly the candidates are vetted, the less likely they will be a poor match,” says Rosemary Haefner, vice president of human resources at CareerBuilder.
Haefner advises employers to allow job candidates the opportunity to meet as many employees in the department as possible — especially if they will work closely together. Also, candidates should provide ample evidence to show they have the skills and work experience required for the position.
Hiring mistakes happen … but why?
When asked to give a reason for the bad hires, an estimated 34 percent of employers attributed the mistake to the fact that sometimes things just don’t work out. However, a rushed decision topped the list of reasons companies gave for making a bad hire.
· Thirty-eight percent of employers said they needed to fill the job position quickly.
· Twenty-one percent say insufficient talent intelligence contributed to bad hiring decisions.
· Eleven percent didn’t perform reference checks (a commonly undervalued part of the hiring process, according to Gilt Groupe CEO Kevin Ryan)
The price of a bad hire: It’s more than just money
The price of a bad hire adds up in a variety of direct and indirect ways. For example, 9 percent of companies said bad hires result in legal issues and 11 percent said they result in fewer sales. The most common effects of a bad hire are:
· Lost worker productivity: 41 percent
· Lost time to recruit and train another worker: 40 percent
· Costs associated with recruiting and training another worker: 37 percent
· Negative impact on employee morale: 36 percent
· Negative impact on client solutions: 22 percent
How bad is bad? Characteristics of a bad hire
When it comes to what makes someone a bad hire, employers reported several behavioral- and productivity-related problems:
· Failure to produce the proper quality of work: 63 percent
· Failure to work well with other employees: 63 percent
· Negative attitudes: 62 percent
· Immediate attendance problems: 56 percent
· Subject of customer complaints: 49 percent
· Failure to meet deadlines: 48 percent
OUCH! These costs are painful. But an excellent buffer between you and the pain of a bad hire is just a phone call away at BarryStaff. Try our Temp-to-Hire program and make sure about that new employee before you expose yourself to big losses.