Cost Breakdown of a Bad Hire

A bad hire is extremely costly to all parties involved, with the costs being both monetary as well as relationship based. To the IT recruiter, there is wasted time and effort as well as the opportunity costs that arise from the candidate that would have been the right fit if they only had the chance to pursue this position. The client bears the cost of the time and money spent to find, interview, hire, then train the candidate, as well as pay any compensation owed for the time that the candidate did work. For the candidate there is the wasted time along with the opportunity costs for the position that they passed on in which they may have been the perfect fit, never mind they now have a short-term position that will warrant an explanation to future suitors.  Lastly, the IT recruiting agency bears the costs of paying the technical recruiter to do the work that eventually led to the bad hire as well as the major cost to the client relationship for placing a candidate that was not the right fit. The IT staffing agency will likely then have to spend more time and money to ensure that the relationship with the client is still intact. If the unsuccessful placement leaves a sour taste in the IT manager’s mouth, and the relationship is subsequently severed, then the IT recruiting firm loses all future revenue opportunities.

The costs of a bad hire can be related to the costs of bringing your vehicle to a mechanic and having it break down soon after. In this scenario, the mechanic is the candidate, the driver is the technical recruiter, and the car is the client. The car is not working correctly and needs to be fixed: the client company has a void in their team that needs to be filled. The driver becomes aware of the problem and takes time to research and contact multiple mechanics (candidates) to fix this car (the IT recruiting process). They spend time and money to qualify each mechanic and choose the one that will be the best fit for the task of fixing the vehicle (IT job interview process). They chose to go with a certain mechanic and bring the car in to get repaired (offer/acceptance). During this time the driver has to wait, rent a car, and keep in contact with the mechanic (waiting for the start date, keeping the candidate warm and the search ends on client side). Finally, the mechanic calls and the car is ready to be picked up (start date). The driver is happy to have his car back and begins to drive it around not worrying that anything can go wrong (candidate’s first week). Two weeks in, the car starts smoking and breaks down on I-95 during rush hour. The driver, being surprised and angry, calls the mechanic to find out what happened. The mechanic denies all responsibility (it is found that the candidate is not working out). The car is suffering and in desperate need of a new mechanic. All three parties involved are back to square one.  The mechanic needs to find a different car to work on as he will not be asked to work on this car again.  The car is even worse off than it was before and is in immediate need of a new mechanic and the driver needs to start the process of finding and qualifying new mechanics with even more pressure than before. If the next mechanic doesn’t work out or the driver cannot find one that will work, the car will stop running and the driver will be out of a car.

In the end, the two biggest costs of a bad hire are the time wasted by all parties involved and the cost to the relationship between the IT recruiting agency and the client company. The time wasted is significant – a recruiter generally spends a 2-3 days working on a requirement from a client. This time is not billed to the client, the money and expense is absorbed directly by the IT recruiting firm.  During the IT recruitment process, the goal of the technical recruiter is to identify 3-4 candidates that would be a fit for the role. However, next there is the time it takes to push for feedback on their resumes, set up interviews, wait for feedback on the interviews, extend the offer, ensure that the candidate accepts the offer and finally make sure that the candidate is ready for the start date. In total the IT recruiter probably losses at least a week of work on a bad hire. Subsequently, the IT staffing firm loses the costs of that technical recruiter’s salary, never mind the revenue of another position that he or she could have been working on that produced better results.  Compound this same scenario and you might find that IT recruiting agency out of business in the near future.

On the client company’s side, an average IT manager usually takes about 4-5 hours reviewing resumes, 3-4 days interviewing candidates, an internal meeting or two to compare notes and discuss feedback, then a day to make a decision. Then there’s also the time and money it takes to train the candidate. In all, the client company loses almost 2 weeks total on a bad hire.

Relationship-wise, the client company will be weary of using the IT recruiting firm again and “making the same mistake twice.” If given the chance to fill the IT job again, the IT staffing agency would be under a great amount of pressure to find the right fit for the role and make all the necessary steps to ensure that nothing goes wrong. Subsequently, the technical recruiter and IT recruiting company will have to spend even more time and money the next time around to prevent the same thing from happening again.

In closing, as we have pointed out, the costs of a bad hire are immense.  Therefore, the only way IT recruiters in Boston can prevent such as situation from occurring is to ask all the right questions, and then make sure all the necessary information is on the table and that the candidate fully understands what the role entails. If  any red flags arise with the candidate, do not move forward as it will only be harmful and costly to all parties involved, while cheating the company out of the right candidate and another candidate out of the right opportunity. Of course, some things are impossible to prevent and some things fall through the cracks but a thorough and successful technical recruiter will do everything possible to leave as little to chance as they can. That is the way the IT recruiters at AVID Technical Resources work.  We make our absolute best effort to find every candidate the right job and every company the right employee.

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AVID (Applications, Voice, Internet, Data) Technical Resources is a leading Information Technology recruiting company. Specializing in placing contract and permanent personnel in both Infrastructure Support and Applications Development positions, AVID has a national presence supporting clients ranging from small businesses to Fortune 100 companies. Headquartered in Boston, MA, AVID has achieved tremendous growth since the firm's inception in 2003. This has triggered numerous national awards and recognition, such as being named to Inc. 500 Magazine's list of 5,000 Fastest Growing Privately-held Companies in the US in 2010, 2011 and 2013. Additionally, the firm boasts of having more than 100 five-star reviews on Google from clients and candidates who rave about their experience and interaction with the firm's recruiters.