Cracking the recruitment process is a key part of any company’s success. It could be argued that if a company is doing its job correctly as far as employee engagement is concerned, it won’t have to continually bring in new staff. However, growth and factors outside of the management team’s control mean that recruitment will always be a vital thing to get right.

The issue, however, is that getting the recruitment process wrong tends to cost a lot of money – there are the obvious losses, such as recruiter and salary costs, but there are also losses that can’t necessarily be quantified, such as drops in productivity and damaged employee morale.

Every situation is different – recruiting the wrong sales executive is going to cost a company less than recruiting the wrong CEO – but even the lowliest hire can cost a business thousands if it doesn’t work out. Unfortunately, many companies calculate the cost in terms of what they need to pay the recruiter and not in terms of the business’s other needs. They have to align the recruitment strategy to the goals of the business. If they hire the wrong people and are continually taking financial hits from re-recruitment, this will begin to affect cash flow, where effective recruitment is just one arm of many, and cause major problems if other parts of their business are beginning to flounder.

Recruiter costs (£4,500)

Monster estimated that the average position costs around £4,500 to fill in terms of recruiter .... This covers the advertising of the position (for however long until it is filled), the identification of candidates and the extra fees paid for a successful recruitment.

Training costs (up to £1,000)

It is believed that it takes around 28 weeks for an employee to become fully productive, especially if they have to be trained and developed during that time. Training costs will vary depending on the position, industry and previous experience of the employee, but can run into the thousands. In 2007, it was estimated that companies were spending $1,200 on each employee’s tr.... It isn’t inconceivable, therefore, that six months of training in 2015 could amount to about £1,000.

Salary costs (£15,000)

Most bad hires won’t be identified immediately – as noted above, it may take about six months to ascertain that they are not working to the standard expected of them (for whatever reason), and that means six months of salary has been wasted. If they are being paid £30,000 per annum (as an estimate), that’s £15,000 that the company has lost. For that reason, it is in a company’s best interests to assess a new candidate’s on-the-job capabilities as quickly as possible.

The total cost of making a bad hire, therefore, could be estimated at around £20,500.

However, the total does not take into account the costs of hiring the recruiter for a second time, training a new hire for a second time and committing to a new salary for a second time. You might also have to pay severance packages and compensation costs, meaning that total might even rise above £50,000. Now imagine that happening two or three times a year.

There are also the immeasurable costs involved with making a bad hire, such as the loss of productivity from employees who are lacking in morale as a result of the hire, negative publicity, any theft or embezzlement (unlikely but it can happen) and employee endangerment.

With all of this in mind, it really is in businesses’ best interests to get their recruitment process right to start with, rather than going through a trial-and-error process every time and hoping they strike lucky, or making do with a substandard candidate.