The shocking cost of hiring the wrong person
18th Feb 2021
What's the goal of recruitment?
To build productive and high functioning teams so businesses can meet their goals.
The harsh truth is that this takes investment, time and widespread commitment. Staff payroll can account for up to 70% of total business costs once you factor in salary, benefits, bonuses and other related taxes.
Hiring is not straightforward and predictable; it can take a lot more work than simply finding the person with the right skills and experience. Research by McKinsey & Company suggests the top 5% of talent is up to 8 times more productive than average talent. One of the key differences between a high performing team, and an average poorly performing team, is the genuine care the employees demonstrate towards each other.
Employees who feel valued by their companies are more committed and satisfied which means more motivated, productive and engaged employees. You want productive staff, so hiring right is essential to save your business from the cost of hiring the wrong person. In the UK, businesses fail to hire the right person 2 out of 5 roles1.
How much do you think hiring the wrong person costs? Their salary, recruitment fees, some management time?
The true cost: It can be up to 3 x a person’s annual salary.
Not only is this costly in terms of direct cost but there are many in-direct costs which need to be taken into consideration. A poor hire at mid-manager level with a salary of £42,000 could end up costing your business £132,015*. I’ve broken down the costs below, to show you were the coins start to add up.
First, you have direct costs. The obvious ones being:
• Salary paid for time spent with your company.
• Recruitment agency fees. Followed by more potential fees to find a replacement.
• Wasted management time and training costs.
• Lost productivity leading to lost profits.
Now, let’s add in your indirect costs:
• increased workload for remaining staff.
• Loss of team productivity.
• Revenue losses from underperformance.
• Staff turnover.
• Impact on your wider reputation.
Use our recruitment calculator below to find out the true financial impact of hiring the wrong person. The results are based on formulas from Perfect Match (Making the right hire and the cost of getting it wrong)* researched & published by the Recruitment & Employment Confederation October 2017.
Interested in learning more about our recruitment services or the cost of hiring the wrong person, get in touch with Ian Weatherup, Managing Director at Corvus.
P: 07880 751 089