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The Cost of Hiring the Wrong Employee

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According to Forbes, the cost of hiring the wrong employee can be as high as 30% of the employee’s first year earnings. Some of the cost factors include hiring costs, compensation, cost of maintaining employee, disruption, severance and cost of mistakes, failures and missed business opportunities. To a small organization, the costs involved with hiring the wrong employee can be a threat to the business. According to 75% of employers have at some point hired a bad employee. Some of the main cost risks to consider are:

Productivity Cost

Having a disengaged employee can have a ripple effect in your organization. Not only are they not doing their job, but may reduce overall productivity as other employees are forced to pick up the slack. This is especially true if other employees rely on this employee to provide them with information or guidance so they can do their job. This can be a great drain on your productivity and bottom line when other employees are relying on a weak link. In addition to reduced productivity this can also negatively impact employee morale. If an employee is let go, it will cause other employees to wonder what happened and if their jobs may be in jeopardy as well, which will lead to further reduction in productivity, or in worst case, good employees eventually leaving as well.

Financial Cost

Having poor performers on your team will lower the bar for other employees, causing them to not perform to their highest potential which will cost your organization in lost revenue and lost opportunity. Poor performers also cause bad habits to spread.  In the end the biggest cost is the lost revenue he or she is not generating but not performing the job, or closing the sale. Other expenses can include interview expenses such as travel, hotel and meals. And once the employee has left the company, you may have to pay for Cobra and other termination expenses.

What are other employers saying?

In a survey conducted by CareerBuilder, the most common ways a bad hire impacts their business are:

Bad hire survey

Hiring the wrong person can cost your organization, not only in direct up front hiring expenses, but also lost productivity long term. Trust your instincts about a candidate during the hiring process. More often than not they will be correct. In addition to having all the right skills and qualifications for the job, make sure they fit your company culture. Getting this one wrong could make an otherwise “perfect candidate” completely ineffective for your organization. Lastly, do check candidates’ references. They will help gain valuable insights about an employee that you can’t get elsewhere.

At iMPact Bussines Group, we have a track record of finding the right candidate for even hard to fill positions. Whether you’re looking for someone full-time, contract or contract to hire, we can help you. Click the link below to reach out to us with information about open positions you are currently trying to fill. At no risk or cost to you, unless you decide to hire, we will provide you with a few potential candidates to review. It could be the start of a mutually beneficial partnership!


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