Hiring is a stressful business. And hiring the wrong person can be pretty costly. Even when you simply consider the financial costs of a bad hire, it can be a pretty devastating mistake. Some recruiters estimate the cost of onboarding a new employee at several hundred thousand dollars while the Department of Labor claims it’s at least 30% of the employee’s first-year earnings. And some companies put their financial costs even higher. But perhaps more damaging than those financial costs are the intangible costs. Here are the true costs of a bad hire.
Hiring, firing and replacing bad employees never looks good for a company. And sometimes that turnover becomes contagious. Even some of your best employees might choose to leave over working with the employee in question. They’ll either quit ASAP or start looking for other opportunities. Studies have shown that over 80% of employee decisions to quit have been directly caused by other employees.
As stated above, increased turnover never looks good for a company. It keeps away future job applicants as they wonder whether something’s wrong with your company. And maybe worse, if your bad hiring is interacting with customers and clients, they might start to get wind of your ailing morale. Or maybe the customer interactions from the bad hire are the problem, hurting your good standing with your clients.
A bad apple can spoil everything. Depending on what the issue is, the effects of a bad hire can spread quickly throughout the ranks. Grumblings and complaints can spread like wild fire, as can disengagement. Soon there can be divisions and feuds and grudges, and all that negative energy can crush your productivity. Who has time to work when they’re busy feeding rumors and trying to calm down their co-workers?
If a bad hire isn’t performing well, chances are the rest of your team will have to pick up the slack. Even good employees can get burnt out trying to take on additional responsibilities. They have the best intentions and the good of the company in mind, but they only have so much time and energy in the day and trying to squeeze too much into their schedules can be really overwhelming.
The bad hire might be unproductive and incompetent, or they’re just dragging down everyone else. Either way, keeping this person around is probably throwing your chances for higher profits and sustainable growth out the window.
The good news is bad hires are totally avoidable. Your candidates might have really impressive resumes and their charismatic personalities might knock the interviews out of the park but do your due diligence. Check all references and do a thorough background check. Ask about work habits, punctuality and their ability to get along with others, among other things. For more tips on hiring the right people, contact PrideStaff Thousand Oaks today.