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February 26, 2024
THE TRUE COST OF A BAD HIRE - UNRAVELING THE HIDDEN EXPENSES
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In order to demonstrate the true value of the Talent Acquisition department, and to demonstrate how much money it can save and make for the company given the appropriate resources to do its job effectively, you better know your own company numbers and be able to break it down for the business.

Speaking in $ can get your department more $

There are many estimates out there regarding the true cost of a bad hire. Ranging from 3 months' salary to 3 times the annual salary of the position. Generic estimates are nice, but will only get you so far.

These estimates usually do not take into account the human time invested and the technology stack involved in each hire.

In our last post, we provided the basic estimates you should have in order to get to your cost of bad hire.

This post will focus on the actual components of the calculation.

Component 1 - Job Posting

  • Formulating a job description and/or profile/job analysis
  • Benchmarking salary
  • Posting job in different sources
  • Job advertising cost

Component 2 - Pre Screening

  • Reviewing candidates’ CVs
  • Sending rejection emails
  • Scheduling and conducting phone interviews
  • Pre-hire assessment cost for all candidates who took it
  • Interviews scheduling
  • Conducting all rounds of interviews
  • Integrating interview materials
  • Decision-making discussions
  • Assessment centers preparation, scheduling, conducting, and integration (if applicable)

Component 3 - Interviews

  • Interviews scheduling
  • Conducting all rounds of interviews
  • Integrating interview materials
  • Decision-making discussions
  • Assessment centers preparation, scheduling, conducting, and integration (if applicable)

Component 4 - Background and Reference Checks

  • Background check
  • Integrity test
  • Security debrief
  • Reference interviews

Component 5 - Offer and Preboarding

  • Offer letter
  • Negotiate and sign contract

Component 6 - Onboarding

  • HR onboarding: forms, Onboarding interview
  • IT setup
  • Employee salary in first 3 months
  • Time invested in onboarding by the hiring manager
  • Time invested in onboarding by team members

Component 7 - Productivity Loss

An estimate of how much would a good hire make the company in their first 3/6 months of work. For example: a salesperson would sell in $X. A customer success person would upsell in $Y.

Have the Numbers?

Go to our cost of bad hire calculator

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