No matter how awful it is to realize you’ve made a bad hire… and clean up the resulting damage… what’s even more painful is how much money every single one costs you and your business.
A new study–and I’m convinced that it still understates the damage – shows that the cost of a bad hire is five times their annual salary.
So, the fastest way to get a million bucks is to simply avoid making just two or three bad hires.
Every time you’re tempted to settle–because you’re tired of looking for a great candidate OR you’re desperate OR you think you can’t afford to stretch that extra $20K salary to land your first choice candidate – remind yourself of these costs:
5 times the annual salary!
First, there’s, of course, the actual monetary costs:
- Hiring the B-Player (recruiting fees, job boards, relocation, etc.)
- Firing them (severance, legal fees, outplacement, etc.)
- Training them (onboarding, etc.)
- Then hiring, training, and onboarding their replacement (recruiting costs yet again, etc.)
Plus the hidden costs, which are also very real:
The toll on your patience and productivity. Think about the hours you waste babysitting and micromanaging your B- and C-Players, instead of advancing the business.
The toll on their colleague’s morale. A bad hire causes a negative ripple effect thru your organization. Disengagement is contagious, so when you burden your A-Players with bad-hires, they get antsy and worry about whether their leader (you!) has what it takes.
Opportunity cost: How much ground did you lose during the three or six months while that bad hire was flailing about before you finally pulled the plug? And then another 3-6 months to find their replacement. Imagine how much you might have accomplished with the A-Player in the position to begin with.
Pissed-off customers and prospects. Particularly if the bad hire is in a customer-facing role (Sales, Service, etc). I’ve seen bad hires scare away customers in droves in just a couple of months. You’ll never have another chance with them.
Damage to your brand – remember that 95% of people who have a bad interaction with that bad hire will share that experience with others.
I’m convinced that 5x still understates it.
You just can’t overestimate the cost and damage that even one bad hire does. I’ve left vacancies open for months when necessary, instead of settling for a B-Player.
No Replies to "The Fastest Path to a Million Bucks"