Choosing the wrong person to fill an important executive position can have disastrous consequences for your company. One of the biggest negatives is the surprisingly high cost of a bad hire. A growing amount of research concludes that the cost of such a hiring mistake is thousands and thousands of dollars; the Society for Human Resources Management (SHRM) found that a bad hire costs a company five times the hire’s annual salary. SHRM also notes that replacement costs go up the longer the person has held that position and the higher their position in the organization. When you factor in all the costs associated with the hiring and elimination of natural products jobs in your company, you’ll find the total is much higher than you may have thought.
Here are all the areas where costs add up when hiring and then eliminating an employee:
1. Recruitment Costs: Defining the requirements for your natural products jobs, writing/placing an ad, advertising costs, human resource staff recruitment time, resume receipt and review, scheduling interviews, time spent interviewing and narrowing list of applicants, developing final list of candidates for additional interviews, physicals/drug screens, background checks, reference checks, pre-employment tests, interview travel expenses.
2. Training Costs: Orientation, departmental training, trainer time, training materials, supervisory time.
3. New Hire Costs: Payroll set-up, computer and security passwords, ID cards, business cards, telephone hook-ups, email accounts.
4. Lost Productivity Costs: OTJ mistakes, low productivity levels during training time, negative impact on co-workers’ morale and productivity, lost customers and market share.
5. Compensation Costs: Salary and benefits for the underperforming employee, higher replacement wages, benefits, bonus, relocation expenses.
6. Employee Dismissal Costs: Exit interviews, overtime for other employees, use of temps or consultants, managerial costs, loss of training investment, COBRA and unemployment.
Recruiting is an expensive process, and the impact of a bad hire makes it risky too! This is why so many companies filling their natural products jobs slots turn to executive recruiters to help them find key talent and avoid employee turnover due to bad hiring decisions. While the idea of using an executive recruitment firm might seem unnecessary, you should reconsider that assumption based just on how costly a bad hire can be for your organization.
If you’re one of the thousands of managers who have lost sleep worrying over the sub-par performance of one of your employees, and if you don’t want any more sleepless nights with future hires, then you understand this important fact:
Executive search consultants are worth the investment you make in them! Finding that one right person for your position isn’t a matter of random luck for a good recruiting firm. Ask us about the detailed process we use to match a candidate’s skill set, employment background and management style to your specific position requirements. How can we help you avoid costly bad hires?
