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In the first moment, you may think about the salary paid to the employee who did not perform well in your team. On top of that, the incurred costs of the recruitment process, i.e. the fees of the recruitment agency or the cost of the job advertisement.
The service of the recruitment agency may be covered by a guarantee. In this case, the recruitment process should be repeated without additional costs.
In reality, a bad hire costs your company much more than the costs listed above. The amount may come as a surprise.
In the case of an employee hired for 3 months, the total cost incurred by the company can be as much as 15 times their monthly salary.
This ratio can vary depending on the local market, below are some sources from different countries.* If you need exact figures for your company, check the amount in our Bad Hire Calculator
The value of the employer's gross salary, multiplied by the number of monthly salaries paid to the employee
The cost of firing the employee (paid notice period, possibly severance pay)
The cost of preparing the workplace
the cost of occupational medicine examinations
cost of working time of employees involved in the onboarding and the cost of their reduced productivity during the onboarding process of a new employee
Cost of internal and external trainings
Cost of delays or lack of task completion, loss of business profits
Cost of loss of know-how or clients
Recruitment costs (those already incurred and the cost of re-recruitment)
How to avoid recruitment mistakes and avoid exposing the company to such high costs? We will write about this in our upcoming guides.
First of all, you need to think carefully about the entire recruitment process, carefully make a decision about hiring and use methods and tools that will provide hard data about the candidates taken into account.
Secondly, in the process of recruitment and assessment of candidates refer to the "candidate's persona" and the complete job profile. Thanks to that you will know what is the purpose of the position, which person is likely to achieve this goal, what kind of person we are looking for.
Thirdly, it is worth using tools supporting the assessment and decision-making process, e.g. psychometric tests, Assessment Center / Development Center, in-depth competence interview.
If you want to find out, how we can support recruitment processes for strategic roles in your organisation, feel free to contact me.
Author: Maciej Szczerba LinkedIn Profile
References:
+48 600 911 085
We usually respond within a few hours. You can also make an appointment with us for a specific date by clicking on the link to our calendar below.