The Cost of Hiring the Wrong Person

Hiring is one of the hardest things companies have to do. If they have a recruiter like you, they can skip some of the hassles. But in the end, the hiring decision is still theirs. How can they tell from an interview or two (or more) if someone is going to perform, has the skills they claim to have, and will be a cultural fit for the organization?The truth is, many times they can’t and they end up regretting their hiring decision. So what is the cost of hiring the wrong person? Well, there are the obvious financial costs, such as the recruiting fee, the cost of any ads they may have posted, relocation costs, drug and background screening costs, benefits contributions, and the payroll taxes paid by the company while the person was employed. For clients who want to calculate the actual dollar amount of these and other tangible costs, the Center for Economic and Policy Research, a non-profit organization out of Washington, DC, has created a Turnover Calculator.But there are many other less obvious costs that your clients may not be aware of:

• Time spent interviewing candidate and checking references
• Time spent by the manager and other employees on training
• Time spent by HR on paperwork, benefits administration, and orientation
• Time spent by payroll to set up the new employee
• Loss of clients due to poor customer service
• Loss of employee morale if others have to pick up the slack for the underperforming hire

Most companies do their due diligence with multiple interviews, background checks, and reference checks, so what else can they do to avoid costly bad hires? One option is to hire employees on a contract-to-direct basis. That way, they can evaluate the candidate, risk-free, while he/she is performing the actual job.You can help by providing candidates on a contract-to-direct basis and outsourcing their employment to a contract staffing back-office, such as FoxHire. The back-office will handle background checks and drug screenings. Their employer of record services will handle all of the employee paperwork and administration during the trial period. They offer the candidate benefits during the trial period, and they will also be responsible for the payroll taxes during that time.Best of all, if a company determines that someone isn’t working out, they won’t feel like they have to stick it out with the contract employee and continue to pour more time and money into trying to develop them. They can simply end the individual’s contract and try someone else!