The real cost of not getting your hiring decision right the first time

It’s happened to most hiring execs and HR folks one or more times in their career – hiring the wrong person.

It seems almost inevitable — there’s no way to be perfect when it comes to human decisions. In the best case, we recognize the problem early, sever the relationship ( sometimes with complications) and move on.

The obvious and not-so-obvious costs of hiring the wrong person…

Given the cost of a hire that doesn’t work out, it makes sense to minimize those occurrences as much as possible. Here’s a condensed list of some of those obvious and not- so-obvious costs for hiring the wrong person for a key management /professional position:


  • On-line job posting fees ( charges $395 to post a listing)
  • Print ads (can run upwards of $1000 in metro locations)
  • Up to 30% of the annual salary if you use a search firm
  • Travel fees for out of area candidates
  • HR screening, preliminary interviews and other interviewers’ time

Getting started

  • Moving and relocation fees if applicable
  • Training costs either on- or off-site, including time spent by you, new hire colleagues and reports
  • Learning curve time for new hire

When it’s over

  • Severance package (can run from 3 months to two years with benefits)
  • Legal fees if the situation gets complicated
  • Potential missed deadlines and lower productivity
  • Client relationship problems or loss of clients
  • Fees for temporary or contracted help
  • Lower employee morale
  • Intellectual property loss (whatever of your company’s secrets, plans, practices your severed employee takes away)

Actual estimates of making a bad hiring decision for an employee with a $100,000 annual salary, for example, range from $300,000 to $600,000! It’s much more than just recruiting cost ­­­–it’s equivalent to a capital expenditure!

Five steps to ensure you are hiring the right people

You can take steps to ensure these hiring mistakes are less likely to happen to you and your company by building these five important practices into your process:

1.) Develop a job description (and beyond) that makes sense: I’ve worked with hiring execs who describe a job completely different than how their team presents the position. Take the time to gather the team together to outline the job in its entire reality. Go beyond skills to necessary qualities you want as well – such as inspired leadership, big picture thinking , etc… The result is a clear profile of who you need to fill this position.

2.) Clarify the hiring process: Ensure that HR has the right information, and be committed to working with HR, your team and colleagues for the best possible result. Be clear on your expectations, and make sure the whole organization understands the process. Make sure every person who will be conducting an interview is trained in how to do so.

3.) Take the necessary time: No matter what, don’t allow yourself to be rushed – you will pay double in time later (not to mention the financial cost)if being in a hurry causes you to make a not-so-great decision now.

4.) Make an informed business decision: You know how to do this, because you make decisions based on fact and information every day in all aspects of your business. Just meeting and liking a candidate who looks good on paper isn’t enough. Lots of people are likable, but it doesn’t make them the right person for your opening. Do your due diligence, check backgrounds and references, and dig a little in your interview.

5.) Ask the right questions: Many interviewers spend time talking about the job, the history, the company, before they even start with questioning the applicant. This approach isn’t business smart. Prepare your questions in advance, make sure they are open ended, ask for examples and ask questions that cause the candidate to think. For example, a question like “What can you tell me about your relationships with your colleagues?” is a far cry from “Can you give me some specific examples of colleagues you worked well with and colleagues that were a challenge – and how you handled those?”

In today’s economy, having the right hiring process in place saves real time and money. You can ensure that you maximize your hiring process by taking the right steps before you start filling those top positions.


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