You know how every once in a while you do a mental check to estimate how much money you’ve spent in coffee in the last year, and you’re all, “Holy $*^@! Did I really spend that much money? On coffee?”
Well, replace the word “coffee” with the term “bad hires” and that pretty much sums up the results of CareerBuilder’s latest survey, in which 67 percent of employers said that a bad hire has adversely affected their business in the last year.
Here’s what else the survey of more than 2,400 employers nationwide revealed:
- 40 percent of hiring managers said that one bad hire cost their business more than $25,000 in the last year.
- 24 percent said one bad hire cost them more than $50,000.
(As a point of reference, $50,000 can also get you: Toyota’s first hydrogen car, Carrie Bradshaw’s dress or a cloned pet…and $25,000 can get you Nissan’s new electric car, an entry into the Kentucky Derby, or Michael Jackson’s coffin. Just in case you’re wondering what you’re missing out on.)
What was lost – a breakdown
When asked for specifics on how a poor hire affected their business in the last year, employers reported the following:
- Lost time to recruit and train another worker – 39 percent
- Loss of productivity – 38 percent
- Lost money to recruit and train another worker – 37 percent
- Negative effect on employee morale – 30 percent
- Negative effect on client relations – 21 percent
- Fewer sales – 11 percent
- Legal issues – 9 percent
Where did it all go so wrong?
While it might seem that the plethora of talent available today would make making costly hiring decisions a virtual impossibility, employers reported that time constraints, strained resources and a lack of insight into target talent have been obstacles to finding the right people for their open positions. Of employers who made a bad hire…
- 36 percent said their hiring mistakes happened because they needed to fill the job quickly
- 20 percent blamed a lack of understanding of where their target talent is
- 9 percent attribute the mistakes to unsuccessful sourcing techniques
Understanding who target talent is and how they will fit into an organization is increasingly important as hiring costs increase. For 58 percent of employers, the average cost per hire is more than $1,000, up from 29 percent in 2008. Nearly 10 percent of employers estimate this cost at more than $10,000. The rate gets even higher when it comes to hiring for specialize areas where there is a shortage of qualified talent. For example, 80 percent of IT employers said it costs them in excess of $1,000 to fill an open position, and 67 percent of health care employers said the same.
“Among other things, hiring the wrong talent for a position can have a significant effect on an employer’s bottom line,” says Jamie Womack, vice president of corporate marketing for CareerBuilder. One of the best ways employers can proactively prevent bad hires is to leverage data on job seeker behavior and perceptions, which helps employers target the right talent and find ways to improve their hiring processes.
What steps is your organization taking to improve your hiring and recruitment process?
Forget what you think you know about HR... it's all about to change.
Sign up to start getting exclusive content designed to empower you with the insight necessary to go from HR professional to strategic business partner.