Average Cost Of A Bad Hire

The Cost of a Bad Supply Chain Hire

The cost of hiring a bad employee may be higher than you think. According to the U.S. Department of Labor, the average cost of a bad hire can be 30% or more of the professional’s first year of earnings. The costs can be long-standing and, for a small company, can mean the difference between staying open and closing their doors.

Cost of a Bad Hire: The Statistics

The cost of a bad hire statistics:

  • According to Recruiting Times, it costs $40,000 to replace senior executives and $10,000 to turn around a bad hire for a mid-level position.
  • Replacing management can cost over 50% of the professional’s salary and, in some cases, can cost hundreds (not hundreds) of times what the professional earns in a year.
  • 27% of polled employers reported in 2013 that one bad hiring decision costs over $50,000.

What Contributes to the Cost of Hiring the Wrong Person?

There are many reasons why the wrong hiring choices can cost your company so dearly. One reason is because the wrong candidate costs the company in terms of:

  • Lower morale and productivity at work
  • Recruiting, hiring and onboarding costs associated with bringing the candidate to the company
  • The costs of benefits and earnings while the employee is at the company and under-performing
  • Training costs
  • Lost market share
  • Less engaged customers or fewer customers
  • Negative impact on colleagues who may be affected by the shift in company morale
  • The severance pay, legal fees, unemployment benefits and other costs associated with terminating an employee

Even with all these costs, a company will have to absorb additional costs related to hiring the right candidate for the position. A new talent search can incur costs for: (Don’t care for these bullets)

  • Writing a job description and ad copy
  • Answering phone calls and applications
  • Organizing and managing the influx of applications
  • Screening applications and selecting a short list
  • Checking references
  • Arranging and conducting interviews
  • Testing candidates
  • Holding internal meetings about possible candidates and the recruitment process
  • Having current team members take on more work while the recruiting process is underway
  • Arranging and conducting follow-up interviews
  • Responding to applicants and their queries
  • Sending rejection letters and an offer
  • Paying for training and onboarding again

These costs take up your company resources, and if the recruitment process takes some time, the costs can quickly add up.

Avoiding the Costs

While the costs of a bad hiring decision are high, they do not have to be costs you need to absorb. There are many ways you can avoid a bad hire in the supply chain and logistics discipline. You could work with Optimum Supply Chain Recruiters, a leader in recruitment services in the supply chain and logistics discipline. We partner with you to help you find not only the right candidate, but a truly perfect fit for your needs.

Our extensive experience in the supply chain and logistics discipline and our robust networking practices with both active and passive candidates mean you get access to a wide array of talent so you have more choices. To find out about our recruitment services, contact Optimum Supply Chain Recruiters today.

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