The True Cost of Hiring the Wrong Person


What is the true cost of hiring the wrong person?

Hiring the wrong person doesn’t just affect your bottom line – it can also have indirect costs on your business. Team culture, productivity, and even client relationships can take a hit if you bring the wrong person into the team.

So just how much can a bad hire impact your business? And how can you ensure you find the right fit for a successful hire?

As a business owner or manager, you know that hiring the wrong person is the most costly mistake you can make.

Brian Tracy, motivational speaker and self-development author

Financial Costs

Recruiting and training expenses don’t come cheap. In fact, studies show the real cost of a new hire, in terms of time and money, can be more than 50% of a person’s salary. And a study from the Australian, quoted in Business Review Australia, revealed a bad hire can cost a business up to 2.5 times the salary of the employee.

The financial costs of hiring a bad (or unsuitable) egg can include:

  • Recruitment advertising fees

  • Staff time spent on recruitment processes

  • Salary payments (yes, even if your new employee isn’t a great fit, you still have to pay them for their time)

  • Education and training

  • Costs to rehire

  • Potential legal costs during termination.

A bad hire can cost a business up to 2.5 times the salary of the employee in question.

Workplace Info

Team Culture and Morale

Aside from the obvious financial costs that can come with a bad hire, hiring the wrong person for the job can also put your team’s morale at risk.

The National Business Research Institute report that 37% of companies who reported ‘bad hires’ claimed it negatively affected employee morale and over 18% claimed it had a negative impact on client relations.

If a new employee is underqualified (or simply not pulling their weight) and not adding value to the team, the other teammates often have to pick up the slack. This could lead to resentment of your team’s new colleague.

And if a new employee is simply not a good fit with the company’s existing culture, this can take away the harmony and lead to a tense, negative environment.

Decreased Productivity

Again, if your new hire isn’t quite as qualified as they implied on their CV, the rest of your team could be the ones who have to pay for it with extra effort. This negative impact on productivity could see your other staff working harder to meet KPIs, leading to burnout and loss of productivity.

The time spent rehiring for the position can also lead to other tasks going overdue.

39% of businesses report a decrease in productivity due to a bad hire.

The Costs of a Bad Hire, Global HR Research

Chandler Macleod Group offers psychometric testing to help you gain an understanding of your potential new employees’ behaviours, key motivations, limitations, and development opportunities. Rather than just hiring for skills alone, psychometric testing can help you find the best fit for your team.

Get in touch today to learn more about our staffing and recruitment services.

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