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How much does a bad employee cost the boss?

Mary Lorenz, CareerBuilder Writer

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They may not have experienced the type of public-relations nightmares that Netflix experienced from its ill-conceived decision to launch Qwikster, or that Yahoo saw after firing CEO Carol Bartz over the phone, but two-thirds of American companies say they've made business mistakes this year that they wish they could take back. Many of those mistakes, according to a new survey, came in the form of bad hires, the results of which ended up costing them more than just bruised egos.

According to a new CareerBuilder survey on the cost of a bad hire, 69 percent of employers reported that bad hires lowered their company's productivity, affected worker morale and even resulted in legal issues.

Forty-one percent of companies estimate that a bad hire costs more than $25,000, and 25 percent said it costs more than $50,000.

While some mistakes are beyond the hiring manager's control, there are ways to avoid hiring the wrong person. "The more thoroughly the candidates are vetted, the less likely they will be a poor match," says Rosemary Haefner, vice president of human resources at CareerBuilder.

Haefner advises employers to allow job candidates the opportunity to meet as many employees in the department as possible, especially if they will work closely together. Also, candidates should provide ample evidence to show they have the skills and work experience required for the position.

Hiring mistakes happen -- but why?
When asked to give a reason for the bad hires, 34 percent of employers said sometimes things just don't work out. However, a rushed decision topped the list of reasons companies gave for making a bad hire.

  • Thirty-eight percent of employers said they needed to fill the job quickly.

  • Twenty-one percent say not knowing enough about job candidates contributed to bad hiring decisions.

  • Eleven percent didn't perform reference checks.

The price of a bad hire: It's more than just money
The price of a bad hire adds up in a variety of direct and indirect ways. For example, 9 percent of companies said bad hires resulted in legal issues and 11 percent said they resulted in fewer sales. The most common effects of a bad hire are:

  • Lost worker productivity: 41 percent

  • Lost time to recruit and train another worker: 40 percent

  • Costs associated with recruiting and training another worker: 37 percent

  • Damage to employee morale: 36 percent

  • Damage to client relationships: 22 percent

How bad is bad? Characteristics of a bad hire
When it comes to what makes someone a bad hire, employers reported several behavioral and productivity-related problems:

  • Failure to produce the proper quality of work: 63 percent

  • Failure to work well with other employees: 63 percent

  • Negative attitudes: 62 percent

  • Immediate attendance problems: 56 percent

  • Subject of customer complaints: 49 percent

  • Failure to meet deadlines: 48 percent

Mary Lorenz is a copywriter for CareerBuilder and contributes to its employer blog,

Last Updated: 27/01/2012 - 11:39 AM

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