True Cost of a Bad Hire

A.C.Coy News

True Cost of a Bad Hire

Zappos CEO Tony Hsieh estimated bad hires cost their company well over $100 million. About one-half of HR Managers suggest bad hires cost them thousands. The U.S. Department of Labor says one bad hire can cost you up to 30% of the employee’s first-year earnings. If you’re a big business, these costs can really impact your bottom line. If you’re a small business, it could threaten the very life of your company.

What’s at Stake with Every New Hire?

It’s hard to calculate the numeric cost of a bad hire because there are a number of variables at work such as:

 

  • Is it an executive-level position with a higher salary or a line-level worker?

 

  • How long has the person worked at the company and how much institutional knowledge do they have?

 

  • How much time did you spend on training that person?

 

Replacing an office worker is likely less costly than someone doing a project-specific mechanical role, such as a line worker on a car assembly line. The more training you put in, the higher the salary, and the more knowledge that worker has all affect the cost of the bad hire. However, it’s not just about the money. Like the saying, “One bad apple can spoil the whole basket,” one bad hire can create a negative ripple effect in your organization that can cause all kinds of problems that can’t be measured by a dollar sign.

Here are a few examples of how a bad hire can negatively impact your company:

Motivation across the entire team.

A negative, lazy, or ill-tempered worker can spread problems within a group or department. This can slow down productivity as the group struggles to handle the disruption. The manager of the team may have to deal with increasing complaints or resentment of the worker, or perhaps the company, or even their management style. Keeping workers motivated requires a positive work environment. When that goes awry, motivation is harder to come by.

Productivity is directly tied to motivation.

A bad hire will negatively impact team goals. It may be subtle or blatant, but the smooth performing team will snarl-up as it struggles to work around the bad hire or try to overcome the problems they’re causing.

The reputation of your company is at stake with a bad hire.

Sites like Glassdoor make it easy for a job candidate, current, or former employee to go in and provide you with a bad ranking. Other job candidates will see that rating and just might steer clear of your organization. Reputation is hard to measure and hard to overcome. On social media, it’s easier to spread false or negative information than it is to spread the truth. If you hire one bad employee, you run a high risk of dealing with social negativity later on.

So, the true cost of a bad hire is high, and it has a wider effect than you’d like. The answer to this problem is to work with the team at A.C.Coy. We are the nation’s leading hiring experts with a strong record of finding the right fit for some of the biggest name organizations in the nation. Contact us for your hiring needs today.

 

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