It can be exciting to finally extend an offer to a great candidate after spending weeks or months advertising the job, evaluating resumes, conducting interviews and narrowing your choices. Unfortunately, no matter how thrilled you are with a new hire, you never know exactly how they will work out until they actually get to work. Poor quality, low output, a bad attitude, poor attendance and other issues can be devastating and costly. So, just how much does a bad hire cost in 2020?

The Math Behind A Bad Hire

It's not only the cost of recruiting that figures into the total expense of hiring the wrong person. You have to consider lost productivity, decreased morale, strain on other team members who must pick up the slack and more.

There are several ways to estimate the true cost of a bad hire:

• According to the US Department of Labor, the average cost of a bad hire is 30% of the individual's first-year potential earnings. So, for a role that pays $50,000 per year, the cost of a bad hire would be $15,000.
• According to the Recruiting Times, it costs around $40,000 to replace a senior executive, $10,000 to replace a mid-level employee and $7,000 to replace an entry-level employee.
• The Society for Human Resource Management says that replacing highly technical people or managerial roles can cost anywhere from 50% to 100% of that role's salary.
• A CareerBuilder survey revealed that 27% of employers said a bad hire cost them more than $50,000.
• According to a study by Link Humans, a mid-level manager who earned $62,000 per year and gets terminated after 2.5 years costs the company $840,000 over the course of those 30 months.

As you can see, there isn't one universal formula for calculating the cost of a bad hire. However, some general rules apply in nearly every case. First, the higher the position within the organization and the higher the salary, the higher the cost of a bad hire. The more training wasted on the bad hire and the longer the bad hire stays in their role, the more they cost the company.

How to Reduce Your Chances of Making A Bad Hire

Ultimately, the cost of a bad hire is always more expensive than the cost of hiring the right person. Working with an expert staffing and recruiting firm can help you avoid mistakes. The right staffing partner will help you attract the right people, evaluate resumes objectively, conduct thorough background checks, determine cultural alignment and find you the right fit.

If you are ready to reduce hiring risk this year, partner with the experts at PrideStaff today. Contact us to learn more about the ways we can help you control costs and improve the quality of new hires.