Here are some typical costs for an employee making $55,000 who leaves after eight months:
• H.R. involvement (interviews, onboarding): $1,100
• Manager interviews & other recruiting expenses: $1,000
• Advertising: $400
• Employee salary: $36,672
• Benefits (30% of salary): $11,000
• Training: $800
• Productivity Loss (other employees picking up 25% of failed hire’s work due to learning curve): $9,168
TOTAL COST: $60,140
Obviously, these estimates don’t apply to everyone, but according to industry based studies, 24% of bad hires in the U.S. cost the company more than $50,000. Nearly half cost more than $25,000. For failed executive hires, those costs can be 10-15 times the monthly salary. Those are big numbers, and they affect more than the bottom line. A bad hire hurts productivity and morale, not to mention the loss of intellectual property.
In 2010, 2/3 of companies reported a bad hire adversely affecting their business. Perhaps you are one of them. Here are a few quick tips for reducing the chance of it happening again:
1. Closely monitor turnover rate. Put it on your list of quarterly metrics.
2. Understand why someone leaves, and take steps to keep it from happening again. Conduct exit interviews, and treat the exiting employee with respect. There’s a reason he is leaving, and it’s in your best interest to know why.
3. Develop a strong recruiting process that brings in people who fit your culture, environment and organization.
Here’s a simpler one-step formula: partner with Brightwing! Our success depends on the success of your hires, and we have an impressive history of getting it right. We would like to
help you reduce your H.R. costs.