More than you might think. According to the Society for Human Resource Management (SHRM), many companies report a bad hire costing as much as $250,000 per instance. With the potential monetary loss so high, it’s easy to see why companies are scrambling to find more effective methods of hiring.
Breaking down the numbers
At first glance, a quarter of a million dollars can seem like a comically high number for simply hiring the wrong person. The scariest part is how untrue that sentiment really is. Check out this list from SHRM that names the different areas where investments are lost when a hire turns out poorly:
- Recruiting costs, including advertisement fees and staff time
- Relocation and training fees for replacements for the bad hire
- Negative impact on company morale
- Disruption to ongoing projects
- Potential loss of customers/clients
- Outplacement services
- Weakened employer brand
- Litigation fees
It’s easy to see how these numbers can add up very quickly, and that’s not even factoring in the possibility that your bad hire performed a criminal act while on the job. You only need to turn on the news to see instances where recognizable companies have hired a person without proper vetting, only to have that person commit heinous crimes that cost the company millions, not to mention the impact on the victims and their families.
What leads to bad hiring decisions?
So, with the numbers adding up so quickly and the costs so high, why is this still such a pervasive issue?
This takes us right back to SHRM. According to their recent studies (and those of CareerBuilder), 43 percent of companies reported having made a bad hire because they felt pressure to hire someone quickly.
Worried? We can help.
One of the first steps companies can take to screen out the riskiest hires is to perform a thorough pre-employment background screening on their applicants. A seasoned, well-oiled screening company like GIS can work with you to create an efficient, time sensitive program that reduces the possibility of hiring someone with a criminal background. GIS can also help with other aspects of the hiring process, including fingerprinting, reference checks, and drug testing to help ensure you are doing everything you can to keep your workplace safe and reduce the impact of bad hires.
*GIS’ blog is for informational purposes only, and should not be construed as legal advice. Opinions expressed herein belong to the author, and do not necessarily reflect the opinions or policies of GIS.