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Each Bad Hire Costs Firms $14,900

Nearly 75% of companies admit to making bad hires and it is costing them an average of $14,900 per failed hire, a recent survey by CareerBuilder reveals.

Making a bad situation worse is that such hires can have a negative "ripple effect," says Rosemary Haefner, chief human resources officer at CareerBuilder. The online survey included a representative sample of 2,257 hiring and human resource managers and 3,697 full-time employees spanning different industries and company sizes in the U.S. private sector. It was conducted Aug.16 to Sept. 15.

"Disengagement is contagious--poor performers lower the bar for other workers on their teams, and their bad habits spread throughout the organization," Haefner says. "The best thing hiring managers can do is put in the time and effort on the front end to make sure they have the best available pool of applicants for every job opening. And, just as importantly, have good procedures in place for evaluating candidates."

While the cost of a bad hire and the potential negative domino effect it can have on a team is enough to keep HR directors on edge, there also is the costly prospect of good workers leaving. The average cost of losing a good hire in the last year was $29,600.

There is also a big disconnect between employees and employers when it comes to loyalty. That is because while 75% of workers say they are loyal to their bosses, only 54% say that loyalty is reciprocal. The potential fall out from this is that nearly one-third of employees say they are not likely to stick around the next year.

Bad hires translated to lower productivity, lost time to recruit and train another worker and a lower quality of work for 37%, 32% and 31% of employers, respectively.

Employers who knew they had made a hiring mistake listed the top three reasons as:

  • Thinking candidates who lacked skills could learn quickly (35%)
  • Hiring someone who lied about their qualifications (33%)
  • Betting that a nice person would work out (32%)

Nearly 55% of employers pegged bad hires as not being able to produce quality work, while 53%, 50% and 46% labeled bad hires as having bad attitudes, being unable to work with others and having attendance problems right after being hired, respectively.

Dissatisfaction also runs high for disillusioned employees. "Two in three workers (66%) say they have accepted a job and later realized it was a bad fit, and while half of these workers (50%) have quit within six months, more than a third (37%) have stuck it out," the survey release notes. "Workers who said they had taken a job only to realize it's a bad fit said they noticed their mistake based on toxic work culture (46%), boss' management style (40%), job not matching what was described in the job listing and interviews (37%), and a lack of clear expectations around the role (33%)."

Arte Nathan, founder of The Arte of Motivation, a Las Vegas-based human resources advisory firm, agrees that bad hires can create a "ripple effect among all who work for you, your product and your product quality." So reports the Society For Human Resource Management.

"Most companies don't know the full cost of the turnover, so they don't apply the resources upfront to avoid it," Nathan says.

Firms and their HR teams want to do their best to keep their top workers happy, but keeping unmotivated and untalented employees can quickly drive the top players away, writes Deberah Bringelson, Forbes Coaches Council Contributor. Making matters worse, firms will lose their best and everything they've learned to competitors.

"C-players drive your superstars away, and there is always another company just waiting to welcome them," Bringelson writes. "They'll take their knowledge and skills—the building blocks of your company—with them."

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