What Can A Bad Hiring Decision Cost You?

Do you know what it really costs to hire someone? The “hidden” expenses associated with being an employer are often underestimated. Things like recruiting, interviewing, training, benefits administration, management and turnover add up quickly. Consider the following expenses for hiring an administrative employee at $35,000 per year who terminates after one month:

Employer Time and Resources Cost	Your Estimated Cost?
HR Management Time Create specifications for the position Prepare classified ad Review resumes from 100 ad responses Telephone screen ten candidates Schedule, prepare for and conduct five interviews Conduct assessment testing for three candidates Reference check for three candidates Total HR personnel time: ($45 per hour x 30 hours) = $1,350
Other Recruitment / Interviewing Costs Management interview time ($56 per hour x 6 hours) = $336 Other interviewers’ time ($45 per hour x 6 hours) = $270 Cost of advertising (3” ad run for three Sundays) = $2,016
Salary and Related Costs Salary (for one month) = $2,917 Benefits (based on national average of 35%) = $1021 Overhead, administrative expenses, etc. (20%) = $583
Training / Orientation / Answering Questions Trainer’s time ($35 per hour x 16 hours) = $560 Manager’s time ($56 per hour x 8 hours) = $448
Productivity Losses Compensation for sub-standard performance - co-workers doing or re-doing bad hire’s work: assumes bad hire is working at 75% capacity ($20 per hour x 40 hours lost) = $800
TOTAL EMPLOYER COST = $10,301

This example of a bad hire doesn’t estimate other costs like:

• The negative effect on co-workers’ productivity and morale.
• Lost business and opportunities due to mishandling by the employee.
• Unemployment compensation, severance pay or legal fees.
• Recruitment and training costs that must incurred again to replace the employee.
• The value of your time that could be spend on other projects.

In most cases, a staffing firm like Cambridge Professional Group can help reduce the cost involved with hiring quality employees by:

• Advertising jobs on the client’s behalf and identifying potential candidates.
• Careful screening so that only qualified candidates are presented to the client.
• Guaranteeing to replace a candidate at no cost if employment is terminated before a given time.

For more information, call us at 800.563.6101 or 404.842.2800.