As a leading talent management consulting firm, we’ve seen first hand the common hiring mistakes organizations make.
Often times our clients don’t even realize the cost of time and money. But we know the money lost, as a result of bad hiring practices, should be a huge wake up call for businesses to do a better, SMARTER job of hiring the right people, the first time.
We help companies figure out what their true cost of bad hires actually is, because the alarming truth is that a bad hire can cost a company anywhere from 25% to 250% of their first years salary! (Source: Dice)
Here are 5 areas we have companies focus on when calculating the cost of a bad hire:
1. Wasted salary of up to 6 months (63%)
2. Recruitment costs and time (5-40%)
3. Training costs (and time) (5-20%)
4. Morale impact on rest of team (5-50%)
5. Missed business opportunities (infinite!)
The percentages are estimates of an annual salary (Source: Manager Foundation)
Often times we’re asked what are the opportunity costs? Here are just a few:
· Supervisors spend 17% of their day managing poor performing employees. That equals 1 day EVERY week!
· 39% of hiring managers/HR professionals said a poor hire cost them productivity and team morale.
· 60% said bad hires don’t get along with other employees and affect customer satisfaction.
As you can see many of these costs we list are intangibles – and it’s difficult for companies to put a figure to them – but without a doubt – THEY ARE COSTLY!
With unemployment at an all time low, companies feel pressure to fill empty roles ASAP. And because of this urgency, they often make poor hiring decisions – and settle for the skills-fit candidate, rather than the right-fit.
Its time to get serious about hiring right – the first time!
Here are the 3 tips we share with companies who are interested to use best practices in hiring:
1. Implement a talent strategy that connects your business strategy to your talent needs. Great news, we can tell you more.
2. Create an effective job description, not just a checklist of skills and experience required.
3. Focus your interview on determining soft skills and culture-fit (things you cannot teach).
Understanding what causes your bad hires is just the first step – contact us for more information on how to strategically source and recruit successfully.