The cost of hiring the wrong person

22 02 2010

I guess most of us have worked out that hiring the wrong person as the new CEO or CFO is an expensive business. Most of the hiring we do isn’t that critical – we think. Of course we might want to bear in mind the following three facts:

  1. Most of our customers don’t meet the CEO. Their experience of our service is often down to the hourly waged person behind the desk or in the call centre
  2. The wrong person in the wrong place doesn’t just reduce effectiveness or productivity – they can destroy value by driving away good staff as well as valued customers
  3. If you hire someone on minimum wage and they stay three months (quite a modest timeframe for discovering we have genuinely made a mistake in hiring), then on average the total cost (direct + opportunity) will be at least one year’s wages

(Contact me if you want to see the working on that last one.)

In which case it might be worth treating every hire as if it mattered; it probably does.

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