The shocking cost of a bad hire

Hiring the Right Talents

Recruiting the right employee is crucial to the success of any organization, no matter how big or small. A good hire can ignite new ideas and add great value to the workforce and your overall business. Inversely, a bad hire can throw your company’s budget and productivity out of alignment.

4 Ways a Bad Hire Can Negatively Impact your Business:

1. Recruiting Efforts

Recruiting efforts relate to the amount of time and money you spent advertising, pursuing, interviewing, screening, and making offers to potential candidates. This time can never be recovered and will eventually slow down the business’ current affairs. The latest Compensation Planning Outlook published by the Conference Board of Canada calculates the average time-to-hire as such: 15 weeks for an executive-level job and 9 weeks for a mid-management job. This nearly amounts to a year quarterly, making it a timely process, thus outcomes should be profitable.

CBS News recently listed the cost of replacing an executive-level employee as being, on average, 213% of the annual salary for the position. Recent studies have estimated the cost of a bad hire to be anywhere between 1.5 to 3.5 times their annual salary. These numbers are just touching the surface and only include the cost of posting, HR time, manager salaries, and training fees. Thus, when you hire the wrong mid-level accounting manager earning $60,000 annually, the real bottom line cost to your organization will range between $90,000 and $210,000.

2. On-Boarding Expenses

These expenses are measured by the time and money spent to bring the new employee up to speed. This can include training hours, salaries paid, trainers, on-boarding materials, and more. Training a new employee takes time away from other employees. It may also require sending the new hire to third-party training, in order to immerse them in the ways of the business. It can take up to 90 days or more for a new employee to be fully integrated into, and become acclimated within, their new position. If or when the new recruit doesn’t catch up to speed, or turns out to be unfit for the role, on-boarding expenses become unfortunate sunk costs.

3. Productivity Loss

It only takes one bad hire to trickle a downward-spiral effect on a once-strong team. Competent employees will be forced to pick up the slack and take on additional tasks and responsibilities. The result is a loss of efficiency and heightened employee dissatisfaction, the latter of which can lead to added turnover and turmoil. 39% of respondents in a survey conducted by CareerBuilder reported that bad hires cause productivity to fall. 33% of respondents said that morale was negatively affected by bad hires.

4. Employee Benefit Costs

Incentives, benefits, and health care costs associated to every employee’s benefits are costly. When it’s time to part ways with a bad hire, a severance payment may also be warranted.

Need Help Hiring?

Working with a reputable recruitment firm can substantially reduce the risk, and costs, associated with hiring the wrong employee, saving you time, money, and staffing headaches.

At The Mason Group, we work with organizations of all sizes, from start-ups to Fortune 500s, and we recruit and place professionals at all levels from Financial Analysts to CFOs for permanent, contract, or interim type positions. Hiring consultations with our team are completely free. 

To learn more about our services and speak to one of our recruiters about your specific recruitment needs contact your local Mason Group office today!

Placement Guarantee: We stand behind every candidate we place. If you are not completely satisfied with the person you hire, we will find you a replacement at no additional charge.


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