Most managers agree that hiring mistakes are expensive and time consuming, but seldom do they quantify the negative impact. We have designed a calculator to show you just how much time and money is wasted when new hires underperform and/or do not fit your culture.

Estimate the costs of mis-hiring a couple of people in important jobs. You will probably be very surprised and should be highly motivated to improve your hiring results immediately.

  • 1. Total costs in hiring the person:

    • Recruitment/search fees
    • Outside testing, assessment, record checking
    • Travel costs (for all candidates, spouses, other executives traveling to meet candidates)
    • Relocation (moving household goods, purchasing house for candidate)
  • 2. Compensation: (Sum for all years person was in job)

    • Base salary
    • Bonuses
    • Stock options
    • Benefits
  • 3. Maintaining person in job: (Sum for all years person was in job)

    • Training, courses
    • Travel, conferences
  • 4. Total Severance:

    • Severance fee (salary, benefits, use of office), any legal fees
    • Outplacement counseling fee
    • Administrative costs in separation, wasted time of people in separation
    • Costs in lawsuits caused by the person (EEOC, harassment, wrongful termination, constructive discharge, etc.)
  • 5. Mistakes / Failures, missed and wasted business opportunities:

    For example: drove a key customer away, lost sales, missed quota, missed production goals, impaired customer loyalty, launched three unsuccessful products

  • 6. Disruption:

    Costs of lower morale, driving away other employees, employee complaints, lower productivity, impaired teamwork

  • 7. Other:

    Including missed opportunity costs and the number of additional hours spent dealing with mis-hire’s weak points through performance improvement plans — patching things up with customers, etc. multiplied by your hourly salary

  • 8. Estimated value of contributions of the bad hire:

    Even if a sales rep had a $2 million goal but only sold $250k, that $250k x 25% margin = $62,500 is a contribution.

  • Grand total costs of your mis-hire (#1 through #8):

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