Can you afford a bad hire?

Recruiting a new employee can be an exciting decision, though choosing the wrong person can be more costly than the recruitment in the first place. As one of the biggest hidden or ‘soft’ costs of recruiting, it is also one of the least considered with employers often blaming the candidate rather than their own processes.

On top of other hidden hiring costs like training, supervisory costs and a loss of productivity which can accumulate to over $5k per new staff member, employers must also be aware that making the wrong recruitment decision can double if not triple these already expensive figures.

Employment Office Sales Director Susanne Mather said that the costs of a bad hire can almost always be placed at the foot of the employer or recruiter, rather than the ‘bad hire’ themselves.

“Making the wrong decision usually comes from not recruiting comprehensively enough to begin with,” she said.

“When people aren’t using enough resources to find the right people, they’re making a decision that’s not the best choice possible from a candidate pool that isn’t ideal.”

The costs of hiring the wrong person stretches far beyond merely the cost of readvertising and in the long term can be have one of the biggest influences on organisation profitability.

“Employers need to remember that continual bad hires can result in a lowered morale throughout the entire business from revolving door situations, not to mention damaged relationships with clients and suppliers,” Mather said.

Mather said that she speaks not only from professional experience, but also personal experience when it comes trying to find the right people for her business.

“Sales candidates have been harder to find in the past than they are now, and back then we unfortunately made the mistake of under-resourcing the recruitment of these sales people,” she said.
“The result was hiring people that now days we would never have even considered, and in hindsight in many cases employers can save money by not making a hire at all.”

“On the occasion when there are zero hires from one of our Group Assessment Days, we don’t view it as a waste of time, but rather take the positive view that without this more stringent interviewing and assessment process we may have hired people who we may have regretted down the track,” Mather said.

Any new employee should also have a greater responsibility than their predecessor, with the need to ‘hire-up’ becoming essential for growing businesses, as not only should the new hire do what the old person did, but also be able to add long term value to an organisation.

“The best way to ensure this is have great recruitment systems, enough marketing deployed with expertise and a proven interviewing and shortlisting system that is preferably run by a designated third party to ensure it remains unbiased,” Mather said.

“Lost wages and no return in investment not to mention the additional time and training of a bad hire can really add up to a hefty cost,” she said, “it’s better to resource your recruitment properly in the first place as it will no doubt save you money in the long run.”