The cost of a bad hire can be significant—25% of new employees leave within the first 90 days of a new role.
Employee turnover is estimated to cost Australian businesses $3.8 billion over 12 months.
Recruiting and onboarding new employees is an investment. So what’s the cost of a bad hire and how can you avoid it?
The cost of a bad hire can vary depending on the industry, the position, and the level of seniority. Here are some of the ways a bad hire can impact an organisation:
- Recruitment costs: Businesses spend time and money on sourcing, interviewing, and onboarding new employees.
- Training and Onboarding: Training new employees requires an investment in terms of resources and time. If a bad hire doesn’t perform well or leaves shortly after being hired, the resources spent on their training and onboarding are lost.
- Productivity Loss: A bad hire might struggle to perform their duties effectively, leading to decreased productivity. This can have a ripple effect on the team’s overall performance.
- Mistakes and Rework: A poorly performing employee might make mistakes that require correction or even result in rework, which wastes both time and resources.
- Impact on Team Morale: A bad hire can affect team morale and dynamics. Existing team members might have to compensate for the poor performance of the new hire, leading to frustration and lower morale.
- Customer Satisfaction: In customer-facing roles, a bad hire’s interactions with customers could lead to dissatisfaction and potential loss of business.
Calculating the exact cost of a bad hire can be complex and depends on various factors. Some estimates suggest that a bad hire can cost a business up to three times the employee’s salary in terms of these indirect and direct expenses.
To mitigate the risk of bad hires, businesses can invest in thorough recruitment processes, including a thorough interview process, skills assessments, understanding candidates’ values alignment, and reference checks. It’s also important to have a clear job description and requirements to ensure that candidates are a good fit for the role.
Ensure you put the responsibility of hiring in the hands of someone who really knows the industry and talent landscape and can manage a thorough interviewing and assessment process. Troy Recruitment Consultants have over 20 years experience recruiting – it’s what we do every day!
Did you know we have a Recruitment Guarantee? That means when you engage Troy as your recruitment partner, we guarantee a period of 3 months where we’ll replace a candidate who resigns at no extra cost, giving you peace of mind.
We work with organisations to find specialised talent in the time frames you need. We take the time to understand your hiring needs and assess candidates thoroughly.
Contact our team or connect with us on LinkedIn for a discussion on how we can help you find the right people you need to grow your organisation.
