Hiring and onboarding new employees can cost a lot of money. But unfortunately, recruiters are often unaware of how much time and money is wasted when a single employee leaves. And it’s common for them to make hiring mistakes. In fact, a large percentage of employers admit to hiring the wrong person for the job.
Hiring a terrible employee, as well as staff turnover, will always be a business risk. In addition, unexpected events occur in people’s lives, and they are forced to relocate to a different town or nation, or they may need to care for someone dear to them. However, you can avoid most terrible hire occurrences if you are well-trained and access the correct recruitment tools.
It is important to know about the factors that affect a bad hire’s cost.
What is the average cost of a bad hire?
Since the cost of hire involves different factors, evaluating this value is challenging. Some of these factors include:
- The compensation package or the combination of salary and benefits an employee receives
- Opportunity cost as you failed to hire a good candidate
- Hiring cost for a replacement
- Onboarding and training costs for the replacement
- Negative impacts of the bad hire on the team performance
- The loss incurred due to the incompetence or below-average performance of the bad hire
- The bad impact and negative word of mouth flawed hiring creates for your brand image
How to calculate the cost of a bad hire?
Because there are so many factors, the only method to determine the potential cost of a terrible hire is to calculate it yourself. You must do the following:
- Multiply the hiring team’s hourly remuneration by the number of hours they spent evaluating resumes, conducting interviews, and doing tasks related to the job vacancy.
- Include the cost of job postings.
- Calculate the cost-per-hire of the software tools you use.
- Add the cost of lost productivity to the total. This may be more difficult to assess, but you should estimate based on your KPIs.
- Multiply the terrible hire’s monthly salary package by the number of months they’ve worked for the company.
- Add in the expenditures of onboarding and training.
Though calculating the cost of a bad hire is an option, it is a time-consuming and challenging task. As a result, the simplest approach to avoid having to quantify the cost of a terrible employee is to avoid hiring one in the first place. But how can you do so?
What are the ways to avoid a bad hire?
Following are five simple yet effective ways to avoid bad hires and unlock the potential of your hiring process.
- Examine your company’s culture and make sure your hiring procedure reflects it.
- Create a clear hiring plan for the entire firm.
- For data-driven recruitment, use pre-employment tests like personality test, cognitive ability tests, aptitude assessment, culture assessments, etc.
- Examine the responsibilities and obligations for each job vacancy.
- Make use of the correct tools and approaches for hiring.
You’ll find that terrible hires are avoidable if you use the correct hiring strategies and tools in your hiring process. First, however, you must have the correct approach in place. Calculating the cost of a bad hire is the first step toward reducing the likelihood of bad hires.
Consider employing the best pre-employment tests offered by trusted and renowned solution providers to make the most of your recruitment drive and expedite your business. One such brand is Discover Assessments which offers the world’s first gamified psychometric assessments. With their data-driven assessments, you can save a considerable amount of money by avoiding bad hires and making your business productive.
