Bad Hiring Costs More Than We Think

I received an article yesterday from Training Magazine, and found the survey results interesting as they provided validation for concerns I've heard from clients recently.

According to the results of a study of 444 organizations throughout North America by Right Management (www.right.com), bad hiring and promotion decisions come with a significant aftermath. Lower employee morale and decreased productivity are the biggest consequences of these less-than-stellar hiring choices.

• 68% of survey respondents cited employee morale as a result of these decisions
• 66% said decreased employee productivity was a consequence
• 54% linked shoddy hiring and promotion choices to lost customers and market share
• 51% said not hiring and promoting properly means higher training costs.

And, that's not the only cost. Human resources gurus, trainers and organizational leaders who don't think carefully before making their next appointment could cost their companies money in other areas as well, especially when direct reports decide to hit the road.

• 44% of leaders, for instance, said bad hiring decisions result in higher recruitment costs
• 40% cited higher severance costs
• Recruitment, training, severance and lost productivity may add up to two times the employee's annual salary 42% of those surveyed said
• 26% said it amounted to three times the employee's annual salary
• 11% cited costs up to five times the employee's annual salary
• 6% said it's four times his or her salary.
• 15% said it's about equal to what the employee would have made in a year had they stayed

Source: Inside Training Magazine newsletter, May 11