The True Cost of a Bad Hire

The 6 consequences of a bad hire and how to avoid them in your business

29 June 2021
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While companies see the direct costs, such as salary, employee benefits and other development costs; the hidden costs can be more damaging. These intangible costs hold negative consequences for companies which aren’t always visible. 

Ryan Holmes (CEO of HootSuite) states that  “One subpar employee can throw an entire department into disarray. Team members end up investing their own time into training someone else who has no future with the company.”

So what are the true costs of a bad hire?

Impact on team morale and stress

95% of employers confirm that a bad hire has previously affected their work team, productivity and stress levels (CareerBuilder Survey, 2015). Not only will the bad hire affect team morale and stress but it may negatively impact the customer turnover rate.

Time and energy to manage poor performance

A bad hire has intangible costs such as time and management. This is due to the fact that other team members will spend their own time trying to teach and manage the poor performance of the bad hire. This workplace disruption culminates in wasted time and energy with on actual management, performance reviews, and consistent people management. 

Lowered Revenue (Bottom Line)

It goes without saying that the cost of a bad hire has explicit monetary implications. An employee is paid a salary, benefits and more, which can equate to a substantial amount. With a bad hire infringing upon this, companies end up wasting a significant amount of time and money.

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Decreased productivity in the workplace

Did you know?

39% of businesses report a productivity decrease as a result of a bad hire? Hence a bad hire has a significant cost of reducing not only the team’s productivity rates, but the company and its associated output. 

Increased time and money on training of bad hire

There are great expenses that come from onboarding and training new employees. Companies do not want to spend time, money, energy and resources on training a bad hire that will not perform well. Eventually more time and money will be exhausted to further train and try to develop the bad hire.  

Statistics-The-Cost-of-a-Bad-Hire

Risk of losing customers

While a potential loss of customers may not directly associated with the employment of a bad hire, there is the relevant risk thereof. Customers do not want to increase the risk of losing customers as customers ultimately drive revenue and sustainability. Therefore it’s important to negate the risk of a bad hire to ensure customers are safe, their demands are met and the company maintains a customer-centric view.

So how do you avoid the cost of a bad hire?

Firstly, it is important to note that taking short-cuts to build a team or company may help in the short run, but it is not worthwhile in the long run. Therefore it is important to build a comprehensive recruitment and hiring strategy that implements the best possible practises to ultimately avoid the cost of bad hire and ensure staff retention.

These days culture fit is essential to a company, but in order to hire the right person for the job, they need not only be the right culture fit but match the knowledge and skills set for the job by trade.

Companies can take a few simple steps to avoid the negative impact of a bad hire. This includes re-evaluating the hiring process and including a comprehensive and independent assessment to understand strengths and weaknesses of incoming recruits objectively.

Fraser-Black-Testimonial

The Digital Marketing Aptitude Test (DMAT) is an assessment that verifies and certifies digital marketing knowledge to provide an independent and objective view of one’s digital marketing strengths and weaknesses. The DMAT assessment is used to reduce the risk of hiring the wrong person for the marketing role. By utilizing the assessment within a hiring process, a company can save time, add value, develop a data-driven hiring process, and ultimately reduce the cost of a bad hire. 

While it may seem counterintuitive (due to the nature and expense of the hiring process) the majority of the cost spent on a bad hire only accumulates once they are hired. Hence it is within the hiring process that the best candidate must be selected to avoid the bad cost at a later stage. 

The DMAT screening assessment is flexible, however, it is best fitted to assess and verify the knowledge and skills level of candidates that have been shortlisted, are considered finalists, or are being interviewed.

Reduce the risk of a bad hire by making sure that candidates have the knowledge and skills to succeed in a digital marketing role

The hiring process can take a while as it involves multiple different stages to ultimately hire the best candidate. Time, energy and monetary resources should be effectively put to use within the hiring process to avoid the cost of a bad hire. Taking short-cuts and under-spending on incoming recruits, may result in a higher cost at a later stage. 

One of the most common mistakes in the hiring process is not actually assessing candidates’ knowledge and skills-level within their field of work. Thus, it is worthwhile to invest in an aptitude test to verify candidates knowledge and skills-level. 

The Digital Marketing Aptitude Test (DMAT) can prevent a bad hire from destroying your bottom line. Use The DMAT within your hiring process to minimize the cost of a bad hire. Assess your candidates with a comprehensive and independent digital marketing screening assessment. 

The-DMAT-Team-Steven-Fine

Steven Fine

steven@dmat.ac
Relationship Manager