Hire Right the First Time or Face These Costs
In a survey of 444 companies throughout North America, Right Management found that..."it costs an average of 2¬Ω times an individual's salary to replace an employee who doesn't work out, including recruitment, training, and severance costs, and lost productivity, according to the survey. More than 4 out of 10 organizations (42%) said it costs at least three times the employee's salary."
According to the survey, the biggest consequences of bad hiring and promotion decisions are:
- Lower employee morale (68%)
- Decreased employee productivity (66%)
- Lost customers/market share (54%)
- Higher training costs (51%)
- Higher recruitment costs (44%)
- Higher severance costs (40%)
To replace an employee who doesn't work out, it costs - in recruitment, training, severance, and lost productivity:
- Two times the employee's annual salary (42%)
- Three times the employee's annual salary (26%)
- Five times the employee's annual salary (11%)
- Equal to the employee's annual salary (15%)
- Four times the employee's annual salary (6%)