But what about the ‘hidden costs’ involved. This includes the value of the time of every internal person involved – from HR redrafting a job ad or re-writing the position description to hours spent again reviewing all applicants to communicating with applicants, short listing process, phone calls, interviews and reference checks. Then add the value (hourly cost) of everyone else also involved, which may be line managers also reviewing resumes, providing feedback and conducting multiple interviews. Was there other team members/managers also involved for their input? This is another cost to be included. Now the cost of replacing a poor hire is starting to add up.
Overlay this with the often overlooked impact on team morale and their increased work load, business reputation (as an employer of choice), loss of productivity in ramping up another new hire and prospect of losing existing staff as a result.
There are various arguments that the cost of a poor hire is somewhere between 50% and 200%(+) of the annual salary of this person.
Cost of Poor Hire Calculator
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Cost of Employee Turnover article
The Cost of Employee Turnover – Link to article
This article consists of a comprehensive checklist of items to include when calculating the cost of employee turnover in any organisation.