We all know that recruitment mistakes can be costly but what is the true cost of a bad hire? Well, a new report from the Recruitment & Employment Confederation has revealed just that.
According to the findings, the total cost of a bad hire at mid-manager level, with a salary of £42,000 is in fact a whopping £132,015!
Let’s break that down, shall we? Wasted salary – £28,000Wasted training – £1,500, Recruiting and training a new employee – £9,730, Lost productivity from a new employee – £9,625, Lost productivity from the team – £29,160, Staff turnover – £54,000!
Despite the obvious financial implications, UK businesses are still hiring the wrong candidates for two out of five roles.
When asked about hiring mistakes, 85% of HR decision-makers admitted their company had made a bad hire in the past. However, one in three believe that the business didn’t suffer any financial losses when the wrong person was hired for a manager, director or senior official role. Even more worryingly, the report found that a fifth don’t actually know how much a bad hire costs a company.
So, how are so many businesses making recruitment mistakes? The report suggests this could be, in part, down to the interview process as nearly two fifths (39%) of employers agreed that the interviewing and assessment skills of their staff should be improved.
“Our calculations show that UK businesses are wasting billions every year because of the volume of hiring mistakes being made,” said REC chief executive Kevin Green. “Shockingly, we discovered that employers are completely underestimating the financial impact of getting recruitment wrong, and not learning how to improve.”
As well as the financial loses, a bad hire can cost your business in other ways, as The Balance discusses…
Impacts the rest of the team
A bad hire can affect everyone in the company, as their work ethic doesn’t normally fit with the rest of the staff and the overall company culture. This can lead to other employees having to pick up the slack or cover up mistakes, with morale taking a serious hit.
From excess training, to managers having to sort out grievances, a bad hire wastes a lot of time, impacting both productivity and your bottom line.
Bad hires often aren’t engaged with your business or their role, so they don’t put 100% into the work they do. This can leave customers unhappy with the service they provide, damaging your company’s reputation in the process.
Using a recruitment specialist can help you save money in the long run by finding the perfect fit. So why not get in with the Lucy Bristow team today?