Cost of a Mis-Hire
The estimated cost of a bad hire ranges from 5 to 27 times the amount of the person's actual salary.
Mis-Hire Costs Include:
- recruitment, search, and advertising fees
- outside testing, interviewing, background checks
- HR department time and administrative costs (for all candidates interviewed, not just the one hired)
- salary and bonuses multiplied by the number of years employed.
- stock options, benefits, direct business expenses
- training costs
- severance fee (salary, benefits), lawyer fees
- outplacement counseling fees
- cost in lawsuits caused by person (EEOC, harassment, OSHA, etc.)
- loss of new business and ideas a great employee would have brought.
- loss of production due to lower morale from other employees
- value of a key customer who was lost or driven away.
- number of additional hours spent dealing with mis-hires weak points:
- patching things up with customers
- re-doing or double-checking work.
- increased workload due to mis-hire not being able to handle their own workload
The ability to attract, recruit, and retain great talent is the key to success for any business.
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