Recruitment Tips, Employer Trends, and Hiring Insights from CareerBuilder

Insights & Trends > Survey Results

What’s the True Cost of a Bad Hire?

They may not have experienced the type of PR nightmares that Netflix experienced from its ill-conceived decision to launch Qwikster or Yahoo! Inc. saw after firing CEO Carol Bartz over the phone, but two-thirds of American companies say they’ve made business mistakes this year they wish they could take back. Those mistakes, according to a new survey, came in the form of bad hires, the results of which ended up costing them in more than just bruised egos.

According to a new CareerBuilder survey on the cost of a bad hire, 69 percent of employers reported that bad hires lowered their company’s productivity, affected worker morale and even resulted in legal issues.

Forty-one percent of companies estimate that a bad hire costs more than $25,000, and one in four said it costs more than $50,000.

While some mistakes are beyond the hiring manager’s control, there are ways to avoid hiring the wrong person. “The more thoroughly the candidates are vetted, the less likely they will be a poor match,” says Rosemary Haefner, vice president of human resources at CareerBuilder.

Haefner advises employers to allow job candidates the opportunity to meet as many employees in the department as possible – especially if they will work closely together. Also, candidates should provide ample evidence to show they have the skills and work experience required for the position.

Hiring mistakes happen…but why?
When asked to give a reason for the bad hires, an estimated 34 percent of employers attributed the mistake to the fact that sometimes things just don’t work out. A rushed decision, however, topped the list of reasons companies gave for making a bad hire.

The price of a bad hire: It’s more than just money
The price of a bad hire adds up in variety of direct and indirect ways. For example, 9 percent of companies said bad hires result in legal issues and 11 percent said they result in fewer sales. The most common effects of a bad hire are:

  • Lost worker productivity: 41 percent
  • Lost time to recruit and train another worker: 40 percent
  • Costs associated with recruiting and training another worker: 37 percent
  • Negative impact on employee morale: 36 percent
  • Negative impact on client solutions: 22 percent

How bad is bad? Characteristics of a bad hire
When it comes to what makes someone a bad hire, employers reported several behavioral and productivity related problems:

  • Failure to produce the proper quality of work: 63 percent
  • Failure to work well with other employees: 63 percent
  • Negative attitudes: 62 percent
  • Immediate attendance problems: 56 percent
  • Subject of customer complaints: 49 percent
  • Failure to meet deadlines: 48 percent

Can bad hires turn into good employees?
For more tips on how to avoiding hiring mistakes, check out the recent interview with Hire with Purpose author Jay Goltz. Wondering whether to fire or try to fix an employee?  Get insight from this recent interview with management expert Anne Loehr, author of Managing the Unmanageable: How to Motivate Even the Most Unruly Employee.

Mary Lorenz

About Mary Lorenz

Mary is a copywriter for CareerBuilder, specializing in B2B marketing and corporate recruiting best practices and social media. In addition to creating copy for corporate advertising and marketing campaigns, she researches and writes about employee attraction, engagement and retention. Whenever possible, she makes references to pop culture. Sometimes, those references are even relevant. A New Orleans native, Mary now lives in Chicago, right down the street from the best sushi place in the city. It's awesome.
8 comments
Michael Howell
Michael Howell

One way to reduce bad hires is to focus on employing good people rather than skillsets. In many companies, recruiting processes have trended towards demanding a full set of required skills for a candidate to be considered. This practice greatly narrows the field for the hiring selection. Companies that identify minimum, essential core skills for each position and focus more on the personal attributes of candidates will end up making better hiring decisions.

Michael Howell
Michael Howell

One way to reduce bad hires is to focus on employing good people rather than skillsets. In many companies, recruiting processes have trended towards demanding a full set of required skills for a candidate to be considered. This practice greatly narrows the field for the hiring selection. Companies that identify minimum, essential core skills for each position and focus more on the personal attributes of candidates will end up making better hiring decisions.

Rod Swartwood
Rod Swartwood

The way to avoid "rushing to hire" (mentioned in the article as a key mistake) is to not wait until there's an open requisition to recruit for. Continuous recruting by your current employees and hiring top talent when you find them - not when you desparately need them and they aren't anywhere to be found - is the key.

Rod Swartwood
Rod Swartwood

The way to avoid "rushing to hire" (mentioned in the article as a key mistake) is to not wait until there's an open requisition to recruit for. Continuous recruting by your current employees and hiring top talent when you find them - not when you desparately need them and they aren't anywhere to be found - is the key.

Dianne, Easy Small Business HR.com
Dianne, Easy Small Business HR.com

It's no surprise that there employers are making bad hires. Most supervisors aren't taught best practices in hiring, not to mention employee management. It's no one's fault really. The recruitment and interview process is not part of the learning process for many managers so managers are winging it. It behooves businesses to take some time to learn best interviewing practices to avoid some of the tangible and not so tangible costs of making poor hires.

Dianne, Easy Small Business HR.com
Dianne, Easy Small Business HR.com

It's no surprise that there employers are making bad hires. Most supervisors aren't taught best practices in hiring, not to mention employee management. It's no one's fault really. The recruitment and interview process is not part of the learning process for many managers so managers are winging it. It behooves businesses to take some time to learn best interviewing practices to avoid some of the tangible and not so tangible costs of making poor hires.

Helping You Hire
Helping You Hire

A common mistake made by many employers is rushing into filling a position. In staffing an open position in a time of need, Employers may jump the gun and cut the pre-screening process short as a quick solution. HR can avoid this costly situation by ensuring they have the right match before they hire a candidate on board.

Here are some useful articles.

http://staffing-solutions.biz/staffing-articles/

Helping You Hire
Helping You Hire

A common mistake made by many employers is rushing into filling a position. In staffing an open position in a time of need, Employers may jump the gun and cut the pre-screening process short as a quick solution. HR can avoid this costly situation by ensuring they have the right match before they hire a candidate on board. Here are some useful articles. http://staffing-solutions.biz/staffing-articles/

Trackbacks

  1. [...] you can’t take chances with your first impressions. We’ve already talked about the cost of a bad hire, and tips for attracting better hires, but beyond that, sometimes you just want an expert to step [...]

  2. [...] a survey of 2,696 employers, conducted by Careerbuilder, the following are just some of the examples that employers experienced from bad [...]

  3. [...] a survey of 2,696 employers, conducted by Careerbuilder, the following are just some of the examples that employers experienced from bad [...]

  4. [...] CareerBuilder survey from December showed 41% employers placing the cost of a bad hire at over $25,000; while another 25% stated each [...]

  5. [...] todo ello es generalmente una decisión y un proceso que conlleva juicio y acierto. Y a la vista de los datos no siempre puede ser que se esté haciendo con eficacia en nuestra [...]

  6. [...] A CareerBuilder Survey from December showed 41% of employers placing the cost of a bad hire at over $25,000; while another 25% stated each bad hire costs the business more than $50,000. With these staggering numbers, it’s no wonder than employers are working to be more cautious about who and when they hire. The biggest problem most employers have, according to the survey, is the need to hire quickly. While certain things do arise in business that can cause a company to need rapid hiring of one or many people, 38% of the businesses surveyed stated this was the cause behind most of the bad hires they took on. A company with 250 employees and a 35% turnover rate could lose over $2.1 million per year in bad hiring decisions assuming that the employees being lost are coming into entry level or lower level positions such as customer service positions or administrative positions. Decreasing that turnover rate by 50% could easily decrease the cost to $1,093,750. [...]

  7. [...] then leaves after six months.  Did you know it is going to cost their organization as much as $25k to $50K to replace you?  You’d better believe they are carrying some of that baggage called resentment [...]

  8. [...] to an article from CareerBuilder.com, a whopping 69% of employers say they hire people who aren’t qualified to do the job or [...]

  9. [...] the wrong hiring decision can be costly.  In fact, a bad hire can cost your company more than $50,000. The simple cost factor alone is enough to lose sleep over, but combine it with disrupting your [...]

  10. [...] consequences of making a bad hire have been discussed for years. Sixty-nine percent of employers reported their companies have been adversely affected by a poor [...]

  11. […] to a CareerBuilder Survey two-thirds of American companies have made business mistakes surrounding the hiring of employees.  […]

  12. Trackback says:

    Maybe…

    I want to start a blog that everyone will read. After all, my opinions are extremely important. How do I get started?.

  13. Trackback says:

    Good info

    Why does Firefox not work since I downloaded yahoo instant messenger?

  14. Trackback says:

    Thank you

    How do i put the blog comment approval on my myspace to approve blog comments before posting them?

  15. … [Trackback]

    [...] Read More: thehiringsite.careerbuilder.com/2011/12/16/true-cost-of-a-bad-hire/ [...]

  16. … [Trackback]

    [...] Read More here: thehiringsite.careerbuilder.com/2011/12/16/true-cost-of-a-bad-hire/ [...]

  17. Trackback says:

    I like your blog

    Where is a good place start a website for business at a very low price?

  18. … [Trackback]

    [...] Read More here: thehiringsite.careerbuilder.com/2011/12/16/true-cost-of-a-bad-hire/ [...]

  19. … [Trackback]

    [...] Read More Infos here: thehiringsite.careerbuilder.com/2011/12/16/true-cost-of-a-bad-hire/ [...]

  20. Cudaminer says:

    … [Trackback]

    [...] Read More: thehiringsite.careerbuilder.com/2011/12/16/true-cost-of-a-bad-hire/ [...]

  21. […] CareerBuilder survey from December showed 41% of employers placing the cost of a bad hire at over $25,000; while another 25% stated […]

  22. […] ten largest global economies have been personally impacted by a bad hire, according to a study by CareerBuilder. When a business hires the wrong person, it has a negative effect on productivity, employee morale, […]

Stay Connected

Subscribe