Tuckman published his famous stages of group development in 1965, which suggests that whenever a group is formed, it must go through four basic stages:
Forming → Storming → Norming → Performing
In many cases, even the best-performing teams end up breaking apart after a new team member comes in. So, while conflict (storming) is unavoidable, it isn’t a part of business as usual in many cases. Sometimes, conflict is stirred up by a particular employee.
Sometimes, the conflict is a result of the employee not being a good fit. Regardless of the case, these conflicts are avoidable from the get-go by making sure you hire the right employee.
In this article, we will look over the cost of a bad hire and how you can calculate its financial impact.
Lost Time & Momentum
This issue is the biggest one you will face with regards to a bad hire. Bad hires reduce work efficiency because of their actions; they also tend to dissuade or distract those around them. As a result, employees maintain a fluent workflow from 10 AM till the lunch break. After that, the momentum rises again from 4 pm till day-end.
Distracted employees will mean reduced work efficiency, which, in turn, will cost the businesses work hours.
Other Direct Financial Costs
Apart from team costs, there are also hiring costs to consider. Some costs may arise because an employee is either not performing properly or is a bad apple. These include:
- Employee sourcing/advertising costs
- Interviewing time
- Orientation resources/training costs
- Wages paid against the benefit gained
- Project inefficiencies
- Managing workload for the bad hire after they leave
Whenever an employee is let go, even if it’s someone who joined recently, it leads to reduced morale and confidence from employees as well, and recovering from this takes time.
Bad Hire Cost Calculator
Moving on to something concrete – how can we calculate the actual cost of a bad hire? There are many factors to consider—direct and indirect costs, the amount of work lost, advertisement costs, etc. How do we account for them all?
That’s where our bad hire cost calculator comes in handy.
You can estimate the cost of a bad hire by calculating different costs related to the hiring process and the productivity lost due to the bad hiring:
- The time spent discovering, evaluating, and interviewing candidates to be multiplied by the hiring manager’s hourly pay.
- The time spent bringing the new hire onboard, and training them for their assigned job role multiplied by the employee’s hourly pay.
- Cost spent on publicizing the position.
- Losses due to the bad hire’s departure and subsequent drop in output and ability to deliver.
Every element is carefully analyzed concerning your organization to make sound business decisions ultimately. Therefore, companies must develop a robust strategy to mitigate this potential risk. Need quality talent but struggling to justify recruiting fees? Look through our, “cost of a bad hire” calculator to see why hiring the best talent is worth the investment.
If you would like to learn more about our services, and to find out how we can help you lower your hiring costs, let one of our experts take over the hiring process for you, contact us today.
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