Do you have any idea what a mishire costs your company? Hire only the right employees – the 20% that generate 80% of your revenue, profits, and cash flow.
The absolute minimum cost is 3 months of that new hire’s pay — or $10,000, whichever is greater.
According to the National Business Research Institute (NBRI) depending on the position, a bad hire could set you back anywhere from $25,000 to $300,000.
Researchers examined five main factors to help them estimate the cost of a bad hire:
- loss in productivity– the annual salary of the employee
- training costs– 25% of the annual salary of the employee
- HR recruiting costs– calculated using the average HR Generalist’s salary
- interviewing costs– calculated using the average HR Generalist’s salary, and
- employment ads for a new hire– anywhere from $100 to $1,600.
source: http://www.hrmorning.com/the-cost-of-a-bad-hire-infographic/
And according to an article by the Harvard Business Review as high as 80% of employee turn-over is due to bad hiring decisions.
source: https://insights.dice.com/report/the-cost-of-bad-hiring-decisions/
Hiring the wrong person for any position is an expensive mistake. Besides the direct costs like wages, bonuses, benefits, severance pay and training the wrong person racks up indirect costs like decreased productivity, reduced quality, more supervision, lower morale of your “right” employees and lower customer satisfaction.
Good results come from good people:
“No company can grow revenues consistently faster than its ability to get enough of the right people to implement that growth and still become a great company.” – Packard’s Law, David Packard, founder of Hewlett-Packard
The right employee, like the right customer is the 20% that generates 80% of your revenue, profits and cash flow.
The “right” employee is a major factor in attracting and keeping the right customer.
Most people keep coming back because they have a relationship of trust with someone in your organization.
We all get it that revenues, profits and cash flow all grow as the “right” customers are attracted to your business and because of this you can now be more selective in new customer acquisitions and concentrate even more resources toward acquiring these most profitable customers. It’s a great cycle to be in.
The cost benefits of attracting and retaining only the best employees which leads to the right customers, are driven directly from the relationship between long-term customers interacting with long-term employees and the way they learn from each other.
Motivated ideal employees stay with a business longer and get to know their customer better which leads to better service and relationships that leads to stronger customer loyalty and ultimately the company’s results of sales, profits and cash flow.
Long-term, loyal employees paint a much stronger picture of your strengths and weaknesses than any advertising could ever do.
Additionally, the birds-of-a-feather-flock-together principle plays a huge role here since people tend to associate with other like them. That is similar values, psychographics and the like. Chances are really good the people your ideal/loyal employee refer are going to fit well with what you offer and will tend to have the same Lifetime Value.
Never mishire again because the cost are too high and the rewards for hiring right are too rewarding.