Bad hires can impact your business in more ways than you might think. And the cost of the damage they do can really add up.
In 2012, approximately one in four employers claimed their bad hire cost them more than $50,000, according to CareerBuilder’s survey.
So what makes them so pricey? According to the survey, these are the five most common ways poor performers cut into your bottom line.
1. Lost productivity
While you probably expect productivity to suffer when there’s an open position, much of the damage is done long before your bad hire makes their exit. Employees who don’t have the necessary skills and know-how will struggle to pull their own weight. This can lead to costly errors and slow production.
While your managers should help new employees get settled into their role, there comes a point when your workers should be able to do their job without ongoing oversight. Whether it’s lack of skill, poor behavior or some combination thereof, constantly meeting with workers to address performance issues takes up hours that would otherwise be devoted to running your business.
2. Lost time to recruit and train another worker
There’s much more to recruiting than meets the eye. You’ll need to write job descriptions, post ads, screen resumes, call candidates, conduct interviews and background checks, and much more.
All the while, your position remains unfilled and you’re forced to put off your money-making duties.
How long will this all take? It depends on the position you’re trying to fill. But a good rule of thumb is at least four to six weeks from when you start the recruiting process. Specialized positions can take much longer.
Recruiting your new employee is only the first step to filling your position. After candidates accept your offer, they will likely need to give their current employer two weeks’ notice.
When it’s finally time for them to join your team, you can’t just throw them into their new job. You’ll probably spend at least two weeks training your new employee, if you want them to stick around.
This can add up to a lot of unproductive time – for you and your open position.
3. The cost to recruit and train another worker
Downtime isn’t the only pricey part of recruiting and training a new employee. You’ll also have to shell out cash every time you advertise on job boards, administer assessments and run background checks.
If hard-to-find talent is what you’re after, your ideal candidates may not be local. You might have to fly them in for an interview. You’ll have to pay for that, too.
Training your new employee isn’t cheap either. You may need to create new materials or even pay for them to attend an off-site course. If they need on-the-job training, one of your employees—typically your hiring manager—will help your new hire get up to speed. Their salary is just another expense.
4. Injured employee morale
Confrontational or difficult workers are a major hindrance to your other employees. Personality clashes among your workers can make for a stressful and distracting work environment. And skirmishes and gossip make it hard for employees to focus on their work.
And when bad employees drop the ball, your other employees are forced to pick up the slack. This can create resentment and bitterness among your workers. It may even cause some of them to leave.
5. Dissatisfied clients
Chances are your clients have certain expectations of your business. An ill-equipped employee will likely be overwhelmed by his or her duties and could repeatedly drop the ball. This can create errors and customer service may suffer. Your clients won’t stick around if the quality of your product or service takes a nose dive.
Additionally, bad hires usually only do the bear minimum. They won’t go out of their way to drum up business or take advantages of new opportunities when they arise.
Quality hires don’t just happen. See how Insperity Recruiting Service can help you hire the best employee the first time.