The cost of hiring the wrong person can be catastrophic for your business
Recruiting the best people is one of the most worthwhile investments you can make in your business. However, the cost of hiring the wrong person can be catastrophic.
It’s estimated that a bad hire will cost you two and a half times the employee's salary, and even more for higher-level positions. So, consider the example of getting the wrong General Manager for your site. The salary will be circa $300,000 so at best this mis-hire will cost you $750,000. If poor technical or investment decisions are made to cost could be significantly more.
It’s not just the cost of recruitment that will hit the company’s bottom line. At every stage of the bad hire’s tenure, the amount keeps adding up. Here are just some of things a mis-hire will cost you:
Induction and training
New employees need to be onboarded, trained, and given equipment. If you’re recruiting in the mining industry, that is even more applicable when you consider the specialised nature of many of the roles. Mine site work involves comprehensive safety training and onboarding. There’s expensive PPE to invest in, and flights to and from sites. The cost of getting someone job-ready for a mining role can skyrocket. And if you get rid of the mis-hire, you’ve got to fork out for someone all over again.
Supervision and management
While new hires will need some additional supervision and management, bad hires will require a lot of it. This takes managers and supervisors away from their other core activities and can harm productivity if the rest of the team are impacted by jobs not completed on time, mistakes made or constant interruptions. If team leaders have to focus their energies on managing a poor performer instead of the business, they’re wasting valuable resources.
Team morale and turnover
If you hire the wrong person, it can have a dramatic effect on their teammates and colleagues. The person might be underperforming, shirking duties, or have a bad attitude. When this happens, valuable employees find themselves picking up the slack, fixing mistakes or feeling uncomfortable and demoralised at work. In fact, studies show 10 per cent of employee turnover is attributed to poor hiring decisions. Losing two or three great employees because you’ve taken on a bad one will cost your organisation dearly.
How to get it right
It’s clear that hiring the wrong person can be a very costly mistake, but it’s not uncommon; according to one recent study, 65 per cent of Australian HR managers say they have hired a new employee who failed to meet expectations. So, what can companies do about it? A reputable recruitment company that specialises in the industry, has great connections and does all the due diligence for you will be able to spot a bad hire a mile away. The cost of using a professional recruiter is actually comparatively small, especially when compared to the bill you’ll have when you’ve taken on the wrong person. Investing a bit of money on your recruitment process at the start to make sure you hire the right people could save a lot of time and money in the long run.
You can read more about how to avoid hiring a dud here.
If you need help with recruitment, our team is here to help.