At first glance, the cost of making a poor initial hiring decision can be thought of as simply the out of pocket expenses incurred in doing it all over again. The cost of an online job ad or perhaps a fee paid to a recruiter (although with replacement guarantees built into the service fee this should not be the case). Medical or other background checks outsourced at cost prior the new hire beginning. Legal fees in drawing up offers and contracts. Training costs invested in the new recruit initially. Even down to business cards and marketing material for the new hire. This is the visible cost, and probably not a great deal of money right?

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

Cost of poor hire xlsCost of Recruiting Calculator PDF

Would you like a working editable version of this calculator to see what the true cost to your business could be from making a poor hire and/or high employee turnover? Please give us a call/email.

Cost of Employee Turnover article

Cost of employee turnover pdfThe 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.

If you would like any more information about Alexander Porter Pty Ltd, our capabilities and how we can help Identify, Source and Attract your next staff member, please call to discuss and/or arrange a time for us to come to your office. Call our office on (03) 9111 0070 or 1300 27 56 27 (1300 AP Jobs) or email us directly to info@alexanderporter.com.au.