We all know that hiring the wrong employees can cost organizations a huge amount of money.
But here are some startling figures.
When it comes down to it, getting the right fit the first time matters a lot more than you thought it did.
Let’s look at the list of things that can add up when an appointment goes wrong.
(Based on hiring an employee on $52000. per year)
- Hiring Costs include: (conservative estimates only)
Advertising the position $500
Reading resumes – 20 hours of your time @ $50 /hour $1000
Screening applicants and short listing – another 20 hours of your time $1000
Interviewing the best 3 applicants – another 8 hours of your time $ 400
Checking references – phone conversations with referees = 3 hours $ 150
- Cost of maintaining the employee through three non-productive early months
probably equates to 50% of 3 months wages – $52000/4 x 50% $6500
- Disruption when they leave or are terminated = loss of productivity until
replaced could easily equal the cost of those non-productive early months $6500
- Severance – payouts on departure = accrued leave entitlements, depending
on length of employment could be at least another month’s wages $4300
- Total $20350
Lost business is another variable that can vary with every business so
must be an add-on and
Replacement costs which must be incurred again
It is not inconceivable that a “bad hire” could be a $50,000 – 100,000 mistake and most business managers are not professional recruiters so chances are bad hires will occur from time to time.
So, how can a business avoid the “bad hire” risk?
One way could be to labour hire a casual for the first 3 months with a negotiable transfer fee to take the candidate on permanently at a later date. If the person works out well and fits with the culture of the business and other staff, this is low risk with no interviewing costs, minimal disruption if a changeover is required and no severance costs on departure. Savings are substantial and a professional recruitment is a virtual certainty…and it’s worth a thought.