The Cost of a Bad Hire Can Be Astronomical

Lisa Frye

What does it cost a company that hires a person who's not right for the organization?

By some estimates, it costs more than a quarter of a million dollars to find and hire a new employee. If that person turns out to be wrong for the role, add to that amount the toll that the bad hire takes on a manager's patience and on colleagues' morale, plus a myriad of other costs if the person needs to be replaced.

"The cost of a bad hire is always extensive," said Arte Nathan, founder of The Arte of Motivation, a human resources advisory service based in Las Vegas. "Most companies don't know the full cost of the turnover, so they don't apply the resources upfront to avoid it. If you make a bad hire, there is a ripple effect among all who work for you, your product and your product quality."

It's likely every company has had experience with hiring a person who wasn't a good fit. So how can an HR professional ensure that she doesn't waste her time recruiting, interviewing and making job offers to the wrong people?

Calculating the Cost of a Bad Hire

The cost of recruiting, hiring and onboarding a new employee can be as much as $240,000, according to Jörgen Sundberg, CEO of Link Humans, an employer branding agency in London. There are extra costs incurred when that person turns out to be a poor fit, not the least of which may involve finding a replacement. Brandon Hall Group, a human capital research and analyst firm based in Delray Beach, Fla., identified several variables that go into calculating the cost to replace a bad hire.

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