burningmoneyWith so many eager and qualified job candidates out there today, you’d think it would be easy to find the perfect candidate for your company.

Unfortunately, businesses still fall prey to the plague of the bad hire much more often than would seem necessary. Bad hiring practices–not inferior candidate pools–are generally to blame for these costly mistakes. But are they costly enough to spark real change within your HR department and in your company’s approach to recruiting and hiring? If you didn’t answer with an emphatic affirmative (as in, “You bet they are!”), you may not be aware of the true cost of a bad hire to your business. Estimates suggest that the employee you just had to let go cost you anywhere from 15-150% of their annual salary. And that’s just one bad hire. Imagine if you’ve got serious employee retention issues. Those costs can really bleed your bottom-line. The trouble is, the true costs of a bad hire can be hard to pin down. The following pointers will put you on the right track toward a full accounting of such costs, both monetary and otherwise–and hopefully spur positive change in your hiring practices.

[quote style=”boxed”]Bad hiring practices–not inferior candidate pools–are generally to blame for these costly mistakes.[/quote] Marketing and Ad Costs. Probably the most obvious expense associated with a bad hire is the need to post all new ads seeking their replacement. Once again, depending on how severe your staff turnover is, these costs can run up thousands of wasted dollars for your business. Not to mention the misspent time and energy expended by HR or your hiring manager to compose, post, and monitor what will turn out to be redundant marketing and ad campaigns.

HR Burnout. If you’re fortunate enough or large enough to have a dedicated HR person or department, then yes, it is their job to handle the recruiting, hiring, and onboarding of new employees. But even the best HR manager will start to burnout if you/they continually hire unsuitable staff members. If, on the other hand, as is common in many small businesses, your HR person is actually just a management-level employee who has been given the thankless job of hiring new staff, burnout will become an issue even faster. After all, not only will this person have their normal job duties to attend to (or to unavoidably neglect, as the case may be), but they will be constantly dealing with hiring and turnover issues, often without additional compensation.

Lost Wages. When you hire the wrong person, not only do you dramatically increase the probability that you’ll soon have to hire someone better to replace them, but you effectively “lose wages” to the bad hire because you’re paying the wrong person to do an inferior job.

Loss of Morale. A bad hire isn’t just a plague upon your HR manager or your bottom line; they can be a plague upon your staff as a whole. Unsuitable employees will attract the ire and resentment of employees who perform up to or beyond expectations. They can also be disruptive of both the general flow of work in your company as well as the morale of your entire staff. Good employees may actually feel insulted by bad hires who are being compensated for shoddy or indifferent work. Do your best to avoid such problems like–well, like The Plague.

Loss of Productivity. As the sports saying goes, “You’re only as good as your worst player.” A bad hire will not only routinely put in sub-par performances at work, but other employees’ productivity will be reduced because they’ll find themselves having to correct the bad hire’s mistakes and clean up the bad hire’s messes. In this way, adding a bad new employee actually diminishes your business’ total productivity–surely, the opposite effect you were going for!

Damaged Relationships. Most businesses live or die based on the quality of their relationships with customers and other businesses. A key hidden cost of a bad hire is their ability to damage these relationships and/or tarnish your company’s image and reputation. Remember, every employee is a representative and ambassador of your business. Bad hires, if they stick around long enough or occur in large enough numbers, will eventually give your company a bad name. Of all the costs we’ve addressed so far, this one may be the most overlooked, yet also the most difficult to correct.

For more information on sound hiring practices and other employment-related issues, please visit us at Masiello Employment Services.