The U.S. Department of Labor states the average cost of a wrong hire can equal 30% of that individual’s annual earnings (U.S. Department of Labor). For example, a single 100K employee who just walked out the door costs the company $30,000.
These costs mean that even one or two wrong hires could cause businesses to fold.
Exactly how costly it can be is not always immediately apparent.
The following list touches on several of the costs of a bad hire:
Loss of time: According to Glassdoor research, it takes 60 days on average for public sector employees to search, screen, interview, and place a candidate. This doesn’t include the time it takes employees to train their new hires.
Loss of productivity: It can take a new employee 3-6+ months to reach the productivity of an existing person.
Loss of morale: High turnover tends to create a negative atmosphere where employees tend to disengage and lose productivity. Losing a job is one of the most stressful experiences a person can go through and can cause other employees to become anxious about their own job.
Loss of accuracy: New employees take time to learn company policies and protocol and inevitably make errors that cost the company money. The longer the ill-placed hire has worked the higher the costs they are to the company.
Creating a comfortable environment, with competitive pay and benefits goes a long way in decreasing employee turnover but often new hires cannot be avoided. That is why it is important to have a plan for when your company has open positions to avoid costly mistakes.
Many companies try to do it on their own with mixed success because they rarely have the time, energy, or technical knowledge needed to fill open positions. That is why many decide to hire a professional firm or a staffing agency to help them fill critical positions.
A report by CareerBuilder says 66% of U.S. companies made “bad” hires. The best way to decrease the risk of falling into this statistic is to hire a staffing agency that specializes in your particular field.
Agencies, like Theoris, can deliver exactly what you need, better talent, and save you time and energy. The key then becomes choosing the right firm.