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How Much Does a Bad Hire Cost?!

Employers of today are known to go to great lengths in order to ensure the potential of their new recruits. Despite these efforts, bad hires are still commonplace in many industries. In fact, a recent CareerBuilder survey tapped more than 6,000 hiring managers and professionals around the globe in order to collect recent and pertinent information regarding the effects of bad hires in the 21st century. The results may be quite alarming to some employers.

Monetary Costs

According to the survey, 27 percent of U.S.-based employers reported losses in excess of $50,000 within the past year due to bad hires. This could come from any combination of poor workplace relationships, employee absence, training needs, legal fees, low productivity and more.

Furthermore, 41 percent of survey respondents indicated that a bad hire has cost them at least $25,000 within the past year. While these losses may not amount to much for Fortune 500 Companies and those with international partnerships, losses like this can mean the end for locally-owned businesses, community-centric organizations and startup enterprises.

In fact, the CEO of Zappos, Tony Hsieh, admits that his own bad hires have cost Zappos over $100 million throughout the years. As you can see, the true monetary costs of a bad hire can vary greatly based on the size of the company or organization.

Side Effects of a Bad Hire

Although monetary costs are bad enough, these are not the only costs associated with bad hires in the 21st century. Many direct and indirect consequences are also affecting the day-to-day productivity of today’s businesses.

CareerBuilder’s survey indicated that 40 percent of respondents have lost valuable time as a result of recruiting and training a replacement worker for a previous bad hire while 37 percent complained about expenses related to such training and recruitment needs. 36 percent of survey respondents indicated a negative impact on employee morale as a result of a previous bad hire and 22 percent even cited negative effects on their ability to deliver timely client solutions.

How to Avoid Bad Hires

Those who are well-informed and educated on the topic of bad hires can employ several steps in order to avoid, or at least minimize, their chances of onboarding a bad hire. With a little diligence, one might even be able to root out such hires during the recruitment and interview phases.

CareerBuilder’s survey cited a number of characteristics that are commonly reported amongst bad hires of today. The results include candidates who fail to produce the necessary paperwork, those who are unable to get along with their co-workers, those with negative attitudes, employees with immediate attendance issues and even employee-specific customer complaints. By looking for and avoiding such traits, a diligent and proactive manager can start to weed out these recruits from the start.

Employers can also use the initial interview as a way of better determining the potential of their new recruits. By asking the proper questions, verifying references and double-checking their histories, interviewers and hiring managers can put up a strong line of defense against bad hires.

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