Monster Video: Calculating the Cost of a Hiring Mistake
Have you ever tried to calculate the cost of a hiring mistake?
In this Monster video, Roberta Matuson, president of Human Resource Solutions and author of Suddenly in Charge*, recommends that you consider both the "hard" costs of recruiting as well as secondary costs, such as the impact of employee turnover on your customer base.
By: Roberta Matuson
When we look at employee turnover costs, I encourage people to really drill down and look at the total expense.
You can begin by looking at what your costs are for recruitment:
- How much time it’s going to cost you to actually interview candidates.
- Write the job description.
- How much time it’s going to cost you to do reference checking.
- The actual cost of drug testing, if you’re doing that.
- Any department transportation costs that you may need if you’re in the transportation business.
There are lots of expenses associated with employee termination.
Some of the ones that we don’t think a lot about happen to be more in the investment that we made in our people.
- How much have we put in terms of training.
- What will it cost us to train a new person.
- How much time will that person’s manager now be spending to get them up to speed.
We also look at the cost of a lost opportunity -- maybe we have a client who no longer wants to work with us because they’re going with Mary who just left the firm.
And so, in my book, when we talk about the cost of hiring, we really look at making sure that you as a business owner have the tools you need to put pen to paper to really determine in your industry, with your people what it really cost when you make a hiring mistake.
You can avoid situations like this by:
- Having solid hiring practices in place.
- Making sure that everyone is trained in your organization.
- Being the type of leader that people look for.
It’s your job to help them become exceptional employees -- and they’ll need your feedback to do that.
More insights from Roberta Matuson:
- Monster Video: A Recruiting Strategy to Compete for Gen Y Talent
- Boosting your Talent Acquisition in a Challenging Economy
- Employee Termination: How to Graciously Let Go of Long-Term Employees
*Recently voted a Washington Post Top 5 Business Book for Leaders