What is the cost of a Bad Hire?Presentation Transcript
What is the Cost
of a Bad Hire?
What or Who is a Bad Hire ?
A Bad Hire is an aftermath of a poor hiring
decision, in simple words an employee
who is not compatible with your
organizational goals, objectives and
philosophy for any of the following reasons
• Skill Mismatch for the Job
• Cultural misfit
• Attitude Issues
• Inability to perform
Interesting Facts on Bad Hiring
•53% of all the Job applications contain false
or inaccurate information
•34% of all the Job applications carry blatant
lies about their educational qualifications ,
experience and skills
•Less than 50% employers were able to catch
the fake information contained in a job
• 9% of the job applicants falsely claimed that
they had a college degree
•A sizeable number contain false information
regarding why they have left their previous
job and listed false employers
•Source : Society of Human Resource Management Recruitment and Selection
•Wall Street journal 2003
•Career Builder.com Survey 2008
Resume Inflation : Two Wrongs May Mean No Righs , By Barbara Kat Repa , Nolo.com,
•It has been estimated that a single bad hire
costs an organization up to $50000
Traits of a Bad Hire
• Relationship with Co workers and
Employers – Disrespectful, Unhelpful,
showing superior attitude, not fitting in the
company’s environment and values.
Working against the collective goals even
when in a Team. Showing prejudiced
behavior and spreading rumors and gossip.
Not having any rapport with customers.
• Work – Unable to grasp simple instructions.
Repeatedly makes similar and expensive
mistakes. Not able to work independently.
Not punctual, takes extended lunch and tea
breaks. Highly erratic in terms of motivation.
Talks more but delivers less.
• Attitude – Shows no respect for company
policies and rules. Will not accept
instructions or directions from a manager or
a supervisor . Will not accept responsibility
Cost of a Bad Hire
A bad hire has a negative impact on the
• Employers / Decision makers
• Co workers
Impact on an organization
•Cost of a bad hire to an organization is the
summation of hiring cost + compensation +
Cost of maintaining the employee +
Disruption cost + severance
•Revenue and productivity Loss are also the
after effects of a bad Hire . When added to
the cost of failures and missed opportunities
this can be a tremendous loss for the
• Time and Cost spent in training the
employee , Relocation Cost , and expenses
involved in immediately hiring someone new
are some of the other additional overheads
• In a study it was found that the 75% of demand for new
employees is to replace the workers who have left the company
•Indirect cost to an organization includes the
time spent in evaluating, hiring and
managing them on board , time spent by
other employees in mentoring them and
damage to customer relationship
Impact on Employers / Decision makers
• A bad hire impacts the morale of the
employer / decision maker .
•It forces them to question why and where
they went wrong as more often than not
they start blaming themselves.
•Their capabilities as decision makers
might be questioned by the management
•Stress and Inconvenience is another after
effect of a bad hire .
• Employers spend precious time worrying
how to manage the person and rectifying
their mistakes which could have otherwise
been utilized to achieve organizational
Impact on Employees / Co workers
•Negative impact on Employee
Morale as the current employees
may have concerns regarding their
job security and might also start
management’ s decision making
Employees are often asked to
shoulder more responsibility or to
take over the new employees
work to avoid
organizational costs .
•Employee Turnover:- Many of
the top performers leave the
organization when they feel that
organization is being affected or
they are being burdened with
How to do it right the first time
•While some cases are not within the control of the
hiring manager , according to a survey , in 75 % of the
instances , a thorough check of the candidates and
their backgrounds can ensure hiring the right person
•A detailed job analysis goes a long way in
ensuring that you hire the right person for
the job. A basic job description , listing
out the attributes of the person who had
held the job, before it was open helps you
in identifying your exact requirements.
•Detailed prescreening and reference
checks are very important tools to make
sure that you have the right person on
board . It also helps you in avoiding
candidates with criminal background and
those who can be a misfit in your
organizational culture. Other tools like
online tests , assessments, psychometric
evaluations also help you to expand your
How to do it right the first time
•In depth interviewing process , where
you can ask the potential candidates to
work on case studies , give presentations.
This also provide a view on the
candidates’ thought process.
• An interview panel consisting of senior
colleagues will help to make sure that
you get a complete perspective on the
•In case you have more than one suitable
candidate shortlisted for the position ,
bring them on board for a brief stint or
give them a small assignment to help you
choose the right person.
In a new study , it has been estimated that meeting the candidate
more than once has helped employers to avoid a bad hiring
decision. In more than 60 % of the cases. Candidates are met at
•Don’t compromise . If it doesn’t feel
right , it is better to start the hiring
process again rather then bearing the
burnt of a bad hire decision.
•Coaching and training the employee
with the necessary skills, thus enabling
him / her to perform the job better
and making them more suitable for
the requirements not only makes
them loyal towards the organization
but also goes a long way in changing
their attitude and behavior.
• Hire Slow Fire Fast – Despite the
coaching & training if you feel that a
bad hiring decision has been taken, no
time should be wasted in relieving the
employee to avoid incurring further
costs and losses. Retaining them is a
punishment for the employee,
organization and other team members
•Role Change to another position
where the person might be a better fit
can help the person and the
organization in the long run.
•It also helps the employee to be
aware of their skills and talents making
them more efficient and productive .
•Learn from the past . Re-evaluate
your hiring process and avoid making
the same mistakes. Make the hiring
systematic. The interview process can
be divided into technical screening,
psychometric and other assessments,
Case studies & HR Interaction .
•There are many more evaluation
criteria which have been developed by
researchers like situational tests , EQ
tests which can be completed online
to get a complete assessment.
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