Back in February, we published this infographic about the “True Cost of a Bad Hire.” While informative and nice to look at, the infographic didn’t exactly help employers calculate an actual price tag on those bad hiring decisions. A few days ago, I stumbled on what might be a more accurate tool for measuring the actual cost estimate of such mistakes; it seemed absolutely worth sharing. The calculator, hosted by Automatic Data Processing, Inc. (ADP), factors in the costs of advertising, HR staffing, interviewing, productivity losses, relocation and training.
Below is a screen shot of the calculator. By default it is populated with average values based on some data collected from 2002-2004. These rates have no doubt only gone up since then. Even still, it is easy to see how much the average bad hire can cost an employer—especially in today’s economy!
According to this median example, a bad hire comes with bill of roughly $50,000! Now, this is only an average. I’m inclined to think that there are a number of factors not included in this valuation that could make a marked difference: length of time employed, level of job (entry, junior, senior), and length of candidate search.
Either way, it is certainly an interesting look at how much the wrong candidate can cut into your budget. Try out the calculator for yourself. Do you think it’s about right? Way off?
With so much of the “bottom line” on the line, it seems like the right hire just might be the best thing you can do to help your budget this year. Depending on your business cycles, the summer may be the perfect time to examine or re-examine your hiring practices and candidate screening processes. Are you doing everything you can to keep your new hire success rate up? Or, are you seeing that it may be time to seek some professional help with the process?
We’d love to hear what you have found to be the true cost of a bad hire.