image Finding the Right Person for the Right Job image What Pre-Hire Assessments Really Do

These Numbers Show the Impact of a Bad Hire

impact of bad hire

The impact of a bad hire is much deeper than many executives are willing to admit. A bad hire can hurt company morale, can reduce the productivity of the hire’s team, and can lead to a lot of wasted time and energy when that person ultimately needs to be replaced.

New hire assessments can help reduce the number of bad hires in your company, minimizing turnover and helping your business run on all cylinders. Viatech Global reports that 80% of all Fortune 500 companies utilize hiring assessments. These companies understand the potential impact of bad hiring, which includes the following:

Lost Money

According to the US Department of Labor and Statistics, the average cost of a poor hiring decision equates to about 30% of that person’s first year potential earnings. That means that for every bad hire in your lower ranks, your company could lose between $7,000 and $10,000. When you move into the higher ranks, that number can easily exceed $40,000 per bad employee.

And don’t think that bad hires don’t happen in the upper echelons. Zappos CEO Tony Hseih has said that his own bad hiring decisions have cost his company well over $100 million.

Lost Business

A study from the National Business Research Institute found that 66% of employers were affected by a bad hire in 2012. Of those, 37% felt that their bad hire negatively affected employee morale, and another 18% felt that the bad hire impacted client relationships. In other words, a bad hire could lose your company business and might also cause you to lose some of your better people who do not enjoy working with your bad hire.

Lost Time

Every time you hire a bad employee, they are going to waste your time, both by not delivering on the job they were hired to do and by forcing you to repeat the hiring process when the time comes to replace that person. And as we all know, time wasted in the business world is money lost.

New hire assessments make it much easier to avoid bad hires. By getting a comprehensive look at not just the skills of your potential hires but also their personalities, character, strengths, and vulnerabilities, you can make a much more accurate assessment of whether or not a person will be a successful fit with your organization.

About Joy Ruhmann
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