The devil’s in the detail: The real cost of a dud hire can run to as much as $800,000, according to one US estimate.
Getting through job interviews these days requires leaping more hurdles than Olympic athlete Sally Pearson – and for good reason.
You may have your application and resume analysed by computer before anyone will take your call. You may be subjected to hours of psychometric testing and role playing before you see a person you might end up working with.
Then you might have to endure up to seven levels of interviews with recruiters, human resources, potential colleagues, managers and even CEOs before they finally hand over your security pass.
But when you look at the cost of a bad hire, it all starts to make sense.
According to US employee screening service Resoomay, it can cost more than $800,000 ($US840,000) if a company hires a dud (based on a second-level manager earning $59,000 a year over about three years of employment).
This figure (using US data) includes hiring costs of $12,400, total compensation of $180,000, cost of maintaining employee $42,000, disruption costs of $45,000 and severance of $16,200.
It also includes a massive $512,000 in mistakes, failures and missed business opportunities. Just think of the damage a bad employee can do.
No wonder online retailer Zappos tempts its new recruits with $4000 if they quit on the spot. If they are prepared to take the money and run, they were never serious about working there anyway.
So, it makes sense to identify your good hires and work assiduously to keep them. As much as 75 per cent of demand for new employees is just to replace workers who leave the company.
Every person you keep saves about $55,000 in replacement costs, according to website The Undercover Recruiter.
Some companies do pretty much whatever it takes. One of the biggest reasons people leave is a clash with their immediate supervisor, so management training is essential.
People also leave for reasons of career development. So, if they feel they are treading water, or are bound up in bureaucracy, they will walk.
Work-life balance is also a big factor. Organisations need to remember how much private time is being spent travelling for the company, working back in the office and at home sifting through emails and finishing off work that couldn’t be completed on the employers’ premises.
One out of every three workers has some degree of contact with supervisors, management, co-workers or customers outside of their scheduled work time.
Of those, 44 per cent feel highly overworked and you can be sure, as soon as they can, they will move to an employer that cares more about their wellbeing.