Bad hires are costing companies around the world

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DollarsHave you ever accepted a job you knew wasn’t right for you or that you planned on quitting as soon as you could? Not only is this bad news for your career, it’s also a negative for the employer.

Companies can suffer just as much as you when the job fit isn’t right, but they’re the ones picking up the tab. “Making a wrong decision regarding a hire can have several adverse consequences across an organization,” says Matt Ferguson, CEO of CareerBuilder.  “When you add up missed sales opportunities, strained client and employee relations, potential legal issues and resources to hire and train candidates, the cost can be considerable. Employers are taking longer to extend offers post-recession as they assess whether a candidate really is the best fit for the job and their company culture.”

According to a new CareerBuilder survey, more than half of employers in each of the 10 largest world economies say that a bad hire (someone who turned out not to be a good fit for the job or did not perform it well) has negatively impacted their business, pointing to a significant loss in revenue or productivity or challenges with employee morale and client relations.

The cost of a bad hire
The 10 largest world economies have all experienced the costs associated with hiring an employee that wasn’t the right fit. Among those reporting having had a bad hire, 27 percent of U.S. employers report a single bad hire cost them more than $50,000. In the Eurozone, bad hires were most expensive in Germany, with 29 percent reporting costs of 50,000 euros ($65,231) or more. In the U.K., 27 percent of companies say bad hires cost more than 50,000 British pounds. Twenty-nine percent of employers in India report the average bad hire costs more than 2 million Indian rupees ($37,150). Nearly half of surveyed employers in China (48 percent) report costs exceeding 300,000 CNY ($48,734).

Countries reporting bad hires
The BRIC countries (Brazil, Russia, India and China) have the largest number of employers planning to increase the hiring of full-time employees this year. They’re also the most likely to report being affected by a bad hire in the last year. However, this is a problem the majority of employers in all top 10 markets have experienced.

  • Russia – 88 percent
  • Brazil – 87 percent
  • China – 87 percent
  • India – 84 percent
  • U.S. – 66 percent
  • Italy – 66 percent
  • U.K. – 62 percent
  • Japan – 59 percent
  • Germany – 58 percent
  • France – 53 percent

Impacts of a bad hire
The BRIC countries were generally more likely to report negative effects associated with a bad hire such as productivity and revenue losses while the U.S. ranked high in recognizing an impact on employee morale and cost to recruit and train another worker. European countries ranked lower in almost every category, which may be in part because of slower hiring.

Lost productivity

  • China – 57 percent
  • Russia – 45 percent
  • India – 42 percent
  • Brazil – 40 percent
  • U.S. – 36 percent
  • Italy – 31 percent
  • Japan – 28 percent
  • Germany – 25 percent
  • U.K. – 23 percent
  • France – 15 percent

Affected employee morale negatively

  • China – 37 percent
  • U.S. – 32 percent
  • Germany – 31 percent
  • Japan – 31 percent
  • India – 25 percent
  • Russia – 24 percent
  • Brazil – 23 percent
  • Italy – 23 percent
  • U.K. – 22 percent
  • France – 19 percent

Negative impact on client relations

  • China – 32 percent
  • India – 25 percent
  • Russia – 22 percent
  • Brazil – 21 percent
  • Italy – 20 percent
  • U.S. – 18 percent
  • Germany – 17 percent
  • France – 17 percent
  • U.K. – 16 percent
  • Japan – 13 percent

Fewer sales

  • China – 24 percent
  • India – 24 percent
  • Russia – 22 percent
  • Japan – 13 percent
  • U.K. – 12 percent
  • France – 11 percent
  • Brazil – 11 percent
  • U.S. – 10 percent
  • Germany – 9 percent
  • Italy – 9 percent

Cost to recruit and train another worker

  • Brazil – 35 percent
  • U.S. – 31 percent
  • India – 31 percent
  • China – 30 percent
  • Russia – 29 percent
  • Italy – 23 percent
  • U.K. – 22 percent
  • Germany – 15 percent
  • France – 12 percent
  • Japan – 11 percent

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