What are the real costs of a bad rental?

Do you feel that you are ahead of the game for dollars and cents when you decide “NO” to use the services of an executive recruiter in your recruitment and hiring plans? You may be wondering why you should bring a third party into this situation and pay a fee, but have you ever really looked at the costs involved when a “selected rental” doesn’t work out for you?

Figures regarding the cost of bad rent vary, but here are some estimates from various sources. According to the Recruiting Times, “Replacing an employee costs $ 7,000, replacing a mid-level employee costs $ 10,000, and replacing a senior manager costs $ 40,000.”
The US Department of Labor estimates that the average cost of bad rent can “equal 30% of potential earnings in the first year.”

According to the presentation entitled Recruitment and Selection from the Human Resources Management Company, “the exchange of supervisory, technical and management staff can cost 50 to several hundred percent of a person’s salary.”

A quick calculation using the “Bad Rental Cost Calculator” from Automatic Data Processing (ADP) revealed the following results based on an employee who earns an annual salary of $ 40,000 without relocation costs:

“The total cost of a bad hiring employee earning $ 40,000 a year is $ 53,171.15”

The fact is that the cost of bad rent will vary from company to company and from situation to situation; however, there are “direct” costs that you can measure, such as employee pay and benefits, and “indirect” costs that are difficult to measure, such as lost productivity, lost time from other managers or employees involved in the hiring process, and / or time spent training bad rent.

So while paying a recruiter’s fee for finding managers can be seen as an unnecessary expense, it could contribute to your company’s profitability in the long run.

Professional executive recruiters can prevent your company from wasting money on “bad hires” with their expertise in the field and access to the “most efficient” in your industry. More often than not, these “top” people are already working and excel in their current positions; however, an executive recruiter can help your company find and attract them. Over time, when they turn out to be “good employees” – thanks to their productivity and performance, your investment will pay off.

In addition, you will get back all the time you usually spend recruiting and hiring, such as: writing a job and placing an ad, hiring and checking resumes to find potential candidates, scheduling interviews, preparing a “second” round of interviews. , checking knowledge and references, extending the offer … and if the candidate you have hired does not come out, you are starting again – not to mention the costs lost from the “bad employee” salary, benefits, training and orientation costs, your interview time and selection the best candidates.
So even if you think you would be working alone in the recruitment process, you would save money … in fact, it can increase the likelihood of losing revenue. Partnering with a professional recruitment company increases your chances not only to return on your investment, but also to increase your company’s profits in the long term by recruiting and hiring the “most efficient employees” who have an impact on your company’s bottom line.

** Find out the bad hire price for your organization: “ADP’s Bad Hire Calculator”

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