The Cost When an Employee Resigns ǀ A Bad Hire

An employee who leaves your company costs you more than you may think. In addition to the costs associated with the fact that no one is in the position to do the job left open, there are many indirect as well as direct costs associated with an employee resignation.

This is especially so when an employee leaves within a year of employment. Whether you fire the employee or he or she resigns, having an employee depart in such a short time is a sign of a bad hire: either the employee couldn’t do the job or he or she didn’t fit in (the usual reason for leaving quickly).

So just what are the real costs of a bad hire? Read below for some insights.

There are many indirect costs involved when an employee resigns, costs such as:

  • The loss of productivity as remaining employees fill in for the vacant position
  • The cost of having other employees take part in the recruiting, screening, interviewing, and selection (employees such as HR staff, managers, administrative staff as they make appointments, place ads, checking references, etc.).
  • The costs of training the new employee once he or she is hired and the cost of any additional tools, offices, equipment, etc. needed for the training. The lost productivity cost as the new employee gets up to speed in the position.
  • In addition, if employee performance deterioration was the cause of an employee termination, you should factor in the lost productivity of the departing employee’s last days..

Direct costs of a bad hire could include:

  • The costs for advertising the vacancy
  • Any search fees (whether contingent or retained) paid to third-party recruiters.
  • Any fees paid to third-party companies or consultants to check references, perform pre-employment drug tests, conducting assessment tests, etc.

What is the total cost of an employee’s resignation/a bad hire? CBS MoneyWatch in November 2012 reported on a study by the Center for American Progress, that found that the cost of replacing a departing employee is as much as 20 percent of his or her annual for those earning $50,000 or more and 16 percent for employees earning $30,000 or less.

Try before you hire. Arrow Staffing’s temp-to-hire services allow you to try a worker out for about 90 days before bringing the individual on to your own payroll. Our temp-to-hire program allows both Inland Empire companies and workers to see if the partnership is a good fit. If you are looking for temp agencies in the Inland Empire, contact us today.

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