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What is the cost of a bad hire?

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Making a wrong decision regarding a hire is a mistake that more than half of employers in the ten largest global economies admit to making.

A global survey, carried out for CareerBuilder, included more than 6,000 hiring managers and human resource professionals in countries with the largest domestic product, and highlighted that they had hired someone who turned out unsuitable for the job or did not perform well. This always had a negative impact on their business in terms of loss in revenue, productivity and challenges with employee morale and client relations.

Matt Ferguson, CEO of CareerBuilder, explained that “when you add up missed sales opportunities, strained clients and potential legal issues and resources to hire and train candidates, the cost can be considerable. Employers are taking longer to extend offers post-recession as they assess whether a candidate really is the best fit for the job and their company culture.”

When it came to companies making a bad choice in hiring an employee, the UK was in seventh place. But what’s the true cost of hiring a bad employee? Some 27 per cent of those questioned in the UK said the problem had cost their company over £50,000. Last year alone, 62 per cent of UK employers reported a bad hire.

Brazil, Russia, India and China were more likely to have been negatively effected by a bad hire, pointing out a lack of productivity and revenue losses as key end results. The US ranked high in citing an impact on employee morale and cost to recruit and train another worker. European countries, however, ranked lower in almost every category. This may in part be attributed to slower hiring in those markets.

Here are the percentage of employers reporting bad hires in the top ten world economies:

  • Russia – 88 per cent

  • Brazil – 87 per cent

  • China – 87 per cent

  • India – 84 per cent

  • US – 66 per cent

  • Italy – 66 per cent

  • UK – 62 per cent

  • Japan – 59 per cent

  • Germany – 58 per cent

  • France – 53 per cent

What the study outlines is perhaps the constant problem of the skills gap. Businesses in countries all over the world are struggling to find the right talent to fill open positions.

“The study underlines how critical it is for the government, private sector and educational institutions to work together to prepare and re-skill workers for opportunities that can help move the needle on employment and economic growth,” Ferguson advises.

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