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A Poor New Hire Can Cost More Than You Think

Posted by Leslie Ruhland on Feb 15, 2018 8:17:21 AM
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What does it really cost a company to for a new hire that turns out to not be a good fit? Far more than you may think.


In most organizations, the HR department plays a significant role in the recruiting and hiring of new employees. This is especially true for the regulatory and legal components of the process. However, finding, training and onboarding new hires is a critical endeavor that isn't always done well.

It should go without saying that it's in the best interests of every business to do all they can to avoid making poor hiring choices. New hires that are a poor fit for the company, the job itself, or who are simply not good choices as employees in general, can be a huge financial drain on a business.

Unfortunately, it is an all too common occurrence in businesses every day.

Your Business Cannot Afford Bad New Hires

In an article at The Society for Human Resource Management website, it was noted,

The cost of recruiting, hiring and onboarding a new employee can be as much as $240,000, according to Jörgen Sundberg, CEO of Link Humans, an employer branding agency in London. There are extra costs incurred when that person turns out to be a poor fit, not the least of which may involve finding a replacement. 

The costs of recruiting, hiring, training - and then having to let go of a poor new hire - combined with the additional cost of once again finding, recruiting and then hiring another new employee can be outrageous. 

How outrageous? This infographic by Resoomay illustrates some disturbing figures:



Job advertising and HR software company CareerBuilder conducted a survey a few years ago to determine why companies make poor hires. They found that over 40 percent of businesses said they made a bad hire because they were in a hurry and needed someone quickly.

In addition, more 20 percent said they did not have the resources to interview and hire people effectively.

Many businesses find themselves in situations where an employee leaves unexpectedly creating an urgent need to replace them. Other times, the existing staff may be chronically overextended and managers are pressured to get someone on board as soon as possible.

The problem is that those doing the hiring too often overlook a candidates' shortcomings and end up hiring employees who really don't fit the job or the culture of the business. The result is an unhappy new hire, or an unhappy manager. Either way, resolving it becomes an expensive situation for the company.

It Costs for New Hires But Poor New Hires Cost More

Most managers and even many business owners fail to recognize the inherent costs involved in the recruiting and hiring processes. They focus primarily on their own time and efforts expended in the search for a new employee, or the stress of being "short staffed" while looking for a new replacement.

But the costs are real and the added costs a making poor hiring choices can be minimized if not avoided altogether. And this is where the HR department can become a strategic ally in the hiring process.

In addition to a growing and demanding role in recruiting, hiring, and continually training employees, the HR staff will still be responsible for every other function they are typically tasked with such as payroll management, tax filings, employee records compliance, and so forth.

Considering alternatives such as outsourcing is increasingly becoming a cost-effective and strategic option. Accuchex can help you in managing your HR needs, payroll processes, and staying on top of compliance demands. Get your Free Download: Payroll Outsourcing Guide to help you make an informed decision or call Accuchex Payroll Management Services at 877-422-2824.


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Topics: recruiting and hiring, hiring trends, new hire, wrongful termination, employee onboarding

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