A bad hire is like discovering a rotten apple in a carefully curated basket – it spoils the bunch.
Companies sometimes opt to handle recruitment in-house, investing time and resources into finding the perfect fit for their teams. Yet, despite their best efforts, a bad hire can slip through the cracks.
But what exactly is the cost of a bad hire?
It's more than just a minor inconvenience or a blip on the radar. It's a ripple effect that can send shockwaves through an organisation, impacting everything from morale to the bottom line.
Picture this…
It started with the notion to bring recruitment in-house coupled with a captivating job ad shared across platforms, attracting a wave of applicants. Amidst rigorous screening, one standout candidate impressed as a perfect fit for the role.
With great anticipation and high hopes for the future, they were welcomed into the productive team. Immersed into the company's culture, and provided with all the tools and resources needed to hit the ground running.
But as days turned into weeks, and then to months, it was clear that something was amiss, despite the initial promise. Targets were missed, errors were made, and tensions began to rise within the team as productivity dropped.
Efforts were made to support them – additional training, constructive feedback – but it became clear that the fit wasn’t right. The decision was made, albeit reluctantly, to part ways, as the company found themselves back at square one.
The cost of this bad hire was staggering – in monetary terms, but also to team morale and productivity, as well as reputation.
What started out as an effort to cut costs and recruit themselves, ended in a woeful example of recruitment-gone-wrong.
Why?!
Companies sometimes decide to take on recruitment themselves in a bid to save on agency fees that are perceived as needless; what with the abundance of job boards and social media platforms they can post on, it’s never been easier to advertise and fill a roll yourself, right?
However, whilst the allure of saving on fees sounds appealing in the short term, it’s missing the big picture, and can end up costing more money in the long term. Not to mention the impact it can have on existing team morale, productivity, reputation and deviation from core business activities.
Let’s rewind and rewrite a scenario, where a company who understood the bigger picture enlisted the expertise of a specialist recruitment agency…
Lomax has entered the chat.
And that’s where it started, a chat to understand the needs and culture of their client, eager to wow them with their modern recruitment model of personal outreach and multi-channel campaigns, within a cultivated network of targeted candidates.
The Lomax team sprang into action, leaving no stone unturned of active and passive candidates. As talent added up, they conducted meticulous one-to-one qualifying stages, to ensure they represented the best of the best.
The client had never truly seen the depth of the market available before, this was the competitive edge to hiring they’d dreamed about. Interviews went smoothly, thanks to the alignment conversations duly covered by Lomax, and offers were happily made.
It didn't end there. Lomax skilfully facilitated negotiations, leveraging their expert industry knowledge to ensure smooth handling of compensation packages and providing steadfast support as the new hire transitioned to their new team.
And now? Well it’s a thriving partnership between client and agency. The decision to enlist Lomax’s help has more than paid off with top-tier employees who make tangible impacts on success. Building teams and growing business never looked so easy.
Let’s crunch the numbers.
Cutting costs by handling recruitment in-house may seem like a smart move. But beware: a single bad hire could end up burning through your budget faster than you can say 'DIY disaster'.
The cost of a bad hire:
Crafting advert, submitting to various platforms, screening applications = 20 hours of HR time (£40 p/h). Total £800.
Initial qualifying and further shortlisting = 15 hours. Total £600.
Interviews; the rule of 3. You interviewed 3 people, with 3 people on the panel, over 3 rounds. Each interview lasted 1 hour = 27 hours. Total £1,080.
Onboarding and orientation = 10 hours. Total £400.
Parted ways at end of probation period (despite further training). Based on average annual salary of a BDR = 3 months. Total £11,250.
Conservative estimate of 10% decrease of team productivity due to inefficiency and morale. Total £5000.
Overall cost of £18,330 for this bad hire. And we’ve been generous when estimating time at each stage, with the resources and training that go into a new hire.
Specialist recruitment agency:
Using the same salary, at 20% terms, means a fee of just £9000.
A saving of £9,330, which means this version cost the company over 50% less of their budget, what a half price bargain!
And the cherry on the top? There was no upfront cost or risk, no hit to morale, productivity or reputation – just a gargantuan reduction in time and resources spent, which meant they could get back to core business activities.