Learn The True Cost Of Delaying Tough Staffing Decisions 5th March 2018

We have all made bad hiring choices, it is almost impossible to get 100% of hiring decisions perfect. 

Making a bad hiring choice can be costly but the biggest cost comes from the failure to confront the issue and deal with it quickly.

Let’s take a look at an example of two companies that make the ultimately failed hire of someone on a £35,000 salary.

Company 1 notices the problems after 2 weeks and immediately raises the issue with the new employee. A further 4 weeks are spent attempting to deal with these issues but the performance levels do not improve and the employee fails his probation.

Company 2 starts to notice issues after 2 weeks but puts them down to teething problems. Further concerns are vaguely expressed but not to the proper authority, people keep a lid on it because, well no one likes a tell-tale.

The employee attends the probation meeting and a few concerns are raised but they pass on the grounds that they address these points. A short-term improvement in performance is achieved.

After month 4 some serious mistakes are made and the previously underlying issues surface. The new employee is now given a warning about future performance and the management team is fully involved.

One month later and the employee is given his marching orders but, as there are no grounds for instant dismissal, they are placed on a month’s notice.

Now compare an estimated costs of the bad hiring decisions.

Company 1’s estimated cost is approximately £7,000; a substantial amount of money but not when compare with the 2nd example.

The cost to company 2 is estimated at around £35,000! They are also 4.5 months behind their competitor in finding a great person to fill this role.

These are only estimates and some factors involved are intangible but make no mistake, the costs involved in bad hiring are large and they are multiplied by a failure to act.

Our examples include the costs involved during hiring, the period the employee worked and the costs of termination. These can be worked out to the penny if you spend long enough working on it.

We have also included intangible costs including missed business opportunities, disruption to the business, reputational and emotional costs. To avoid overstating the case we have deliberately underestimated these factors but in reality these are the biggest costs.

What is the cost of a bad night’s sleep spent thinking about these issues? The cost of your team dreading coming to work with this person? The cost to your reputation when your customer’s get bad service?

Finally, we have deducted the estimated value of the person’s work from the overall cost because even the worst people do some work!

The point of this exercise is to get a clear understanding, not of the costs involved in making a bad hiring decision, but of the immense value in getting it right! This is what it is worth to you to take some time out and really look at your hiring process and to ask yourself the tough questions that will help you achieve the best possible hiring standards.

Note – for reasons of impartiality we have left a recruitment fee off of our estimates!