Bad Hires Costly

A survey from CareerBuilder finds two in three companies reporting that a bad hire adversely affected their business in the last year.

Bad hires can be costly, as nearly one in four hiring managers said one bad hire cost their business more than $50,000 in the last year. Four in ten said a bad hire cost them more than $25,000.

The survey included responses from more than 2,400 employers nationwide. When asked how a poor hire affected their business in the last year, employers reported:

• Lost time to recruit and train another worker39%
• Less productivity38%
• Lost money to recruit and train another worker37%
• Had a negative effect on employee morale30%
• Had a negative effect on client relation: 21%
• Fewer sale: 11%
• Legal issue: 9%

Among other things, hiring the wrong talent for a position can have a significant effect on an employer’s bottom line, says CareerBuilder. To help prevent bad hires and their impact on the business, employers are exploring new ways to leverage target-talent data and research in their hiring process.

Of employers who made a bad hire, 36% said they think they made a mistake hiring someone because they needed to fill the job quickly, followed by a lack of understanding of where their target talent is (20%) and unsuccessful sourcing techniques (9%).

Understanding who target talent is and how they will fit into an organization is increasingly important as hiring costs increases. Fifty-eight percent of employers have an average cost per hire of more than $1,000, up from 29% in 2008. Nearly one in ten estimate their cost per hire at more than $10,000. Specialized areas that are experiencing a shortage of qualified talent are reporting even higher recruitment expenses. Eighty percent of IT employers said it costs them in excess of $1,000 to fill an open position. Sixty-six percent of health care employers said the same.

Join us at CBIA’s HR Conference on May 3, in Rocky Hill, to hear Allan Polak of ALP Consulting Resources discuss hiring for skills, attitude, and motivation. Check cbia.com and click “Seminars and Conferences” for more information.