The cost of a bad hire - focusing on retention

Blog - 20-09-2024

Premise: experienced planner hired at an annual salary of € 35,000

Suppose he/she/they leaves again after, for example, 4 months, then this employee has cost the company the following:

€70,000 / 12 x 4 = +/- €11,500 (basic salary)

If we include various allowances and infrastructure costs (social contributions, employer contributions, office, environment, miscellaneous costs = coefficient ~ 1.8 to 2.2, depending on location and profile), this doubles (€ 23,000)

That is without taking into account the operating loss. This "uncollected added value related to the investment made" can be estimated between 1.5 and 4 times the wage costs of an employee, depending on the activities and the share of personnel costs in EBITDA.

With a factor of 2, the operating costs amount to a maximum of € 46,000
In addition, there are the costs of the actual recruitment of at least € 3,500.

The total costs now amount to € 72,500 (personnel costs + operational loss + recruitment costs)

This is even before loss of productivity...: a recent study has shown that unsuitable hires cause a decrease in the productivity of the other employees.

Source:  Results of a French study published by the European Federation of Search & Selection Associations, November 2018