Making a bad hire is very costly, but how much does it actually cost? To quantify the amount, let’s do some quick math: The Center for American Progress conducted an in-depth study and determined that the average cost of turnover is 21.4% of an employee’s annual salary. This means that a small company with 100 employees, an average turnover rate of 11% and an average salary of $60,000, will spend around $141,240 on turnover per year! Of course, this number will vary depending on how long it takes to fill a position and the average salary. No matter how you slice it, it’s a significant expense for any company and a particularly painful cost for smaller businesses. Turnover also puts a burden on remaining employees that can result in higher stress levels, faster burnout and lower job satisfaction.
Yes, it’s costly to make a bad hire. But what can be done about it? Perhaps you’re thinking, “We already interview, check resumes and even do reference checks. What else can we do?”
It starts with defining bad hires. Bad hires are usually individuals with some combination of undesirable characteristics, which cause them to be toxic, unqualified, unprofessional and/or unmotivated. Sometimes they just don’t fit in with the company culture. Ultimately, the abilities and personality of the bad hire simply aren’t aligned with the needs of your organization.
Many recruiters hope to weed out bad hires by reviewing resumes and conducting interviews. The problem is that you won’t know how accurate or truthful they were being until after they’ve been hired. Studies show that nearly 50% of resumes and applications contain lies. And when it comes to the interview, candidates are on their best behavior and don’t typically provide an accurate representation of how they will perform on the job. Furthermore, research has shown that interviews are often about as effective as flipping a coin.
Fortunately, there is an easy way to reduce the risk of making bad hires. Pre-employment tests, like Wonscore from Wonderlic, provide data proven to predict job performance. The tests answer the questions:
- Is this candidate motivated?
- Can this individual learn and adapt easily?
- Is this applicant reliable?
The use of validated tests like Wonscore results in better and more informed hiring decisions.
In addition to reducing the cost of turnover, you’re more likely to hire top performing individuals who drive growth. Candidates who fit are happier and more productive. Conversely, if an individual is overloaded, doesn’t fit your culture or isn’t motivated by your mission, they’re likely to be less productive. By testing candidates before you hire them, you’ll be able to help ensure they’ll fit in with your company.
HiringThing has partnered with Wonderlic to offer Wonscore as an integrated solution within its applicant tracking system. The Wonderlic team is hosting a webinar on July 19th to share more about how companies like yours are already using this integration to hire smarter, reduce turnover and identify potential rock stars.
If you’re too excited to wait until then, you can start a free 14-day free trial now.
Author: Alisiana Peters
Alisiana is a senior marketing coordinator at HiringThing, an award-winning online recruiting software provider dedicated to changing the way businesses hire talent. Questions? Contact HiringThing Marketing.