11 Sep 2017
The true cost of a bad hire
The market place for top quality staff has never been more competitive. Companies are hiring permanent staff at the fastest rate since 2015 despite what looks like a slowing economy and increasing concerns with the impact of Brexit. Factor in that unemployment is at a forty-year low and the number of job vacancies is at its highest since August 2015 and you can see that the job market is great for candidates. The competition to get the right employees means that pay offers are also rising with inflation in starting salaries reaching a twenty- month high. So that means that when hiring you need to make totally sure that you get the right person.
Because not only is it hard to find a replacement if they don't work out, the actual cost to your business may be a lot more than you think
I've seen many figures about what a bad hire costs. Some put it at 30% of first year’s earnings. Another report suggests the average the cost to employers of replacing a single member of staff is more than £30,000, according to a recent report. The analysis from Oxford Economics found that by far the greatest expense, more than £25,000, comes from loss of productivity caused by the time it takes - 28 weeks on average - for a new recruit to get up to speed.
Your company loses more than time, money and effort by recruiting, hiring and training people who perhaps shouldn't have been brought on in the first place. You must also deal with the problems that the "wrong" employee can create: the business you may lose when that individual interacts with customers, the cost you incur when you repeat procedures that were handled ineptly and the pressures on other employees who must pick up the slack.
So, when you take all this into account, it really surprises me that some business don't want to pay recruiters fees. Some will question the size of our fees, some will question how hard we work to make them, some ask us to do it as a favour. I will be very honest with you and say that we have turned away business when the recruiting company has not agreed to our fees. Why do we do that? Because we know that we are worth it, that our service is worth it and our consultants are worth it.
At Propel, we have worked hard to grow an experienced and talented team with all the best technology assets at their disposal and a network that is unrivalled. We take huge pride in our work and take care to work to the highest standards of professionalism. Which I'm sure most reading this will say their business does. So, let me ask you this, how would you feel if you were asked to produce piece of work for half price? Or as a favour? Or as a test? Yes, recruitment fees can look like a lot of money. However, they can be fraction of what you could lose if you hire badly.
Here's the hard truth: Every CEO will make a bad hire in his or her life and sadly there's no 100% formula to ensure every new employee is a great one. But when you treat recruiters and their knowledge with the respect that a potentially company-altering decision deserves, you stack the deck in your favour.BACK TO ARCHIVE