Breaking down the costs of a bad hire clarifies why you can’t afford to waste money, time, and resources on people who will not benefit the company in the long term.
Hiring the right person reduces stress in the workplace, meaning that the right candidate is critical to your company’s culture, morale, and productivity.
Money
Money is certainly a key element in discovering the true cost of a bad hire.
By hiring the wrong candidate, the money spent on salary and training will be of substantial waste. In fact, the U.S. Department of Labour estimates that the cost of a bad hire can equal 30% of the employee’s first-year salary. By hiring the wrong person, the company is also wasting money and resources on training and onboarding, which could have been spent on the right candidate. Jörgen Sundberg, CEO of Link Humans, estimates the cost of hiring and onboarding new employees to be $240,000.
Therefore, when you invest money into a new hire, you should ensure that you are investing in your company’s future and not just throwing money
Culture
Other employees may lose morale and engagement if you hire the wrong person. If someone is not right for the job, people will notice, causing the atmosphere to change and employees may question your judgment. These altering opinions could affect employee viewpoint, which could cause company dissatisfaction and ultimately affect the company culture.
Employee Moral
If the company’s culture is altered, employee satisfaction may begin to decrease. When a bad hire starts and leaves, their job is often placed into the hands of someone else, which can lead to increased negativity in the workplace. The rest of the team may become dissatisfied and disengaged and this may cause more employee departures.
Low Productivity
If the company culture changes, so will productivity in the office. According to Robert Half International, supervisors spend one day a week managing underperforming employees. So, if you’re spending this time helping new staff, you’re not performing your own duties, which can seriously affect the productivity of the company.