The high cost of a cheap hire

A client recently confided that while the GFC had created some problems, they were still growing, and badly needed to fill two new key positions. Catch was, they hadn't budgeted for a Main St recruitment company so they were looking for someone "off Broadway" to do the job cheaply for them.

Their approach reminded me of a project with another large public company who told me they could recruit people for the lowest HR management cost per hire in their industry. When I asked how that was working out for them - there was an awkward moment while they mumbled something about line managers having to clear up their own mess. And the termination costs were met out of payroll, not recruitment, so it didn't matter as much!

When we got to grips with the total cost from cradle to grave throughout the recruitment lifecycle, their lowest-in-category claim was in tatters. Many organisations forget to count the cost of recruitment when things don't go well further down the line.

A survey by the U.S Dept. of Labor Bureau of Labor Statistics revealed the average cost of a bad hire by a company can be anything between 25% and 50% of the staff member's first year's salary. And more than 30% of business failures were caused by employee dishonesty. Some industry estimates put the potential cost of a bad hire as high as three times the employee's annual salary!

Australian organisations searching for a more effective way to screen and select employees - and to benchmark the performance of the people already on board, now have at their disposal an excellent, validated tool: the Integrity and Values Profiling System.

Developed in conjunction with leading employment psychologist and international psychometrics expert Dr. Elizabeth Allworth, the profile is now available as web-delivered, (relatively) low-cost, statistically-validated measurement tool, to support your recruitment processes, and to assist to refine and improve the organisational development of your key operational and management teams.

Click the title link above for more details. And feel free to make comments, for example:

• What has been your experience with a bad hire in your organisation?
• How much has it cost, all up, to fix up the damage done?
• what can you do to avoid a repeat occurrence in the future?