Human Resources News & Insights

The cost of a bad hire: INFOGRAPHIC

Depending on the position, a bad hire could set you back anywhere from $25,000 to $300,000.

That’s according to researchers at the National Business Research Institute (NBRI). They’ve created an infographic to explain their findings for the lowest and highest paying jobs.

Based on their research, 66% of employers said they experienced negative effects of bad hires in 2012.

Of these employers, 37% said the bad hire negatively affected employee morale. Another 18% said the bad hire negatively impacted client relationships. And 10% said the bad hire caused a decrease in sales.

Cost per position

Researchers examined five main factors to help them estimate the cost of a bad hire:

  • loss in productivity – the annual salary of the employee
  • training costs – 25% of the annual salary of the employee
  • HR costs – calculated using the average HR Generalist’s salary
  • interviewing costs – calculated using the average HR Generalist’s salary, and
  • employment ads for a new hire – anywhere from $100 to $1,600.

When these factors are combined, companies take a huge hit to their wallets.

The lowest paying jobs – like fast food cook and farm worker – often earn a salary between $18,600 and $20,320. But a bad hire in one of these positions can cost a company an average of $25,000.

It’s a similar situation for the highest paying non-medical jobs. Sales managers and lawyers earn an average salary somewhere between $110,000 and $130,000. A bad hire in those positions can cost employers anywhere from $152,000 to $220,000.

It gets even worse for the highest paying medical jobs, which earn a salary between $191,000 and $233,000. The cost of a bad hire in one of these positions: nearly $300,000.

Why companies make bad hires

So, if bad hires cost so much money, how do they keep finding employment?

For starters, 10% of respondents said the recession has made it hard to pay staff to go through applications looking for the best candidates.

But the number one reason 43% of companies made what turned out to be a bad hire: They needed to fill the job quickly.

NBRI - The Cost of a Bad Hire Infographic

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