We all know that recruitment inevitably takes time and money, even if you recruit in-house. It is an unfortunately rare situation that upon advertising a role, the perfect candidate falls into your lap. It is, therefore, necessary for businesses to invest valuable resources into searching for quality staff. But what if they get it wrong? How much does hiring the wrong candidate cost a company when their new employee does not meet expectations?

Hiring manager's shock upon realising the cost of hiring the wrong candidate — That feeling when you realise how much your bad hiring decision just cost your business!

The above question is at the heart of all efforts to improve hiring processes. Indeed, accuracy is just as crucial as speed during a candidate search. But where poor hiring decisions occur, the business will have to let that person go and find a replacement after only a short length of time.

New research reveals the average cost of poor hiring decisions within a typical organisation. The study by AXELOS, a venture dedicated to best practice solutions set up by the UK Government and Capita, found that a bad hire can cost around £17,000. The survey asked 500 HR managers about situations in which they’ve hired the wrong candidate after advertising a role externally.

Hiring manager looks crestfallen after hiring the wrong candidate — Hiring the wrong candidate can cause your company a massive HR headache in addition to having severe financial implications.

Costs Involved in Hiring the Wrong Candidate

The average cost of hiring the wrong candidate is £16,843. The costs disappear into the following two areas:

£7,810 – allocated to recruitment fees and advertising, sifting of applications, interviewing, induction and new team member training
£9,033 – allocated to loss of productivity and disruption to crucial projects due to a reduced work output by the candidate in question

These costs inevitably vary from industry to industry where average salaries are at different levels. Regional variations are also apparent. For example, an estimate of recruitment costs in relation to IT and telecoms roles is £11,847. Furthermore, the cost of hiring a replacement for such roles was £13,835. Where Media, Marketing and PR positions are concerned, these figures were £7,807 and £10,288 respectively.

The total recruitment and replacement costs of hiring in the north of England were £16,257, while in London it was £20,186.

Management calculating the costs of poor hiring decisions — The financial costs of making a bad recruitment decision can be considerable.

Hidden Costs of Making a Bad Hire

In addition to the obvious financial costs, the consequences of a bad hire can reach much further into a business. Unsuitable employees can upset the morale of existing team members. Any resulting reduction in productivity may also put excessive strain on harder working members of staff. Additionally, where management needs to pay more attention to a new teammate, this can be misconstrued as favouritism which could further exacerbate the situation.

Where an unsuitable individual operates in a customer-facing role, any blunders they make can cause embarrassment to the existing team. Furthermore, this can create additional work for the customer services team who then have to clear up after their mistakes.

Of course, the damage doesn’t stop there. There is also the possibility that bad service from an unsatisfactory team member could cause further reputational damage. The business may well not realise the extent of the damage until bad reviews begin to appear online.

Two thumbs down, the universal sign of a bad review — Bad reviews can do untold damage to a companies reputation.

Tips on Finding the Right Candidate, First Time

Finding quality candidates is never down to pure good luck. To hire quality employees requires a combination of factors to be in place:

From the outset, an effective advertising strategy and a strong employer brand are necessary to attract the right people
Once the business identifies potential candidates, a thorough recruitment process must be in place to assess their suitability
Hiring managers must have satisfactory interview skills and be capable of making sound decisions
An efficient candidate onboarding process needs to be in place to help new employees settle into their role

Having a good recruitment consultant working in partnership with your business can drastically improve your chances of finding the right candidates to fill your vacancies.

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