Hiring a wrong candidate can cost a company in many ways. While it does impact the company financially, it also devastates the existing working culture and work engagement of team members. Issues such as employee disengagement, bad behaviors, and chaotic environment emerge out of a wrong hiring decision.
In an interview with Business Insider, Zappo CEO Tony Hsieh said, “One bad hire can lead to a domino effect of more bad hires and decisions costing a company millions.” Hsieh unfolded that bad hires had cost the company over $100 million.
The acclaimed recruiter, Jorgen Sundberg estimates the cost of on-boarding an employee as much as $240,000. And, according to U.S. Department of Labor, a bad hire at least costs as high as 30 percent of an employee’s first-year earnings.
It’s hard to specify “one number for all companies” to show the cost of bad hiring. Yet based only on the company size, a study by CareerBuilder demonstrates “The average cost of one bad hire is 17,000 USD”.
One of the effective ways to prevent bad hiring is reference checks. No matter how well you know the candidate but having insights into his past can assure you his potentials, temperament and personality. It can also manifest the negative aspects of his professional weaknesses. An automated reference checker by TeleReference can prevent you from hiring bad candidates. It easily records the video references and help recruiters to hire best candidates. While reducing firing rate, it helps save your company from the cost of hiring a wrong candidate.