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Calculating The Cost Of A Bad Hire

Our 'Cost Of A Bad Hire' calculator is built based on science, combined with 25+ years experience of hiring staff in a Big 4 accounting firm.  

The cost to a firm of bringing a new hire on board was explored in depth by Oxford Economics in their 2014 report "The Cost of Brain Drain - the financial impact of staff turnover" prepared for the USA employee benefits giant Unum.  You can read the report here.  The report established that:

1. New workers that come from the same sector get up to optimal productivity much faster than those from elsewhere – on average a staff member joining from another firm in the sector takes 15 weeks to reach optimal productivity, compared to 32 weeks for a worker from another sector, 40 weeks for a new graduate

2. Small firms are quicker at this than large firms, at a lower cost

3. For accounting firms the number of weeks of lost output ranged from 7.4 weeks for those transferring from other firms to between 20 and 21 weeks for those from different sectors or new university graduates

4. For each dollar of lost labour productivity there is approximately 60c of lost 'capital income' which accrues to those providing capital to the business - in accounting firms this is typically the 'dividend' return to the firms owners.

Other factors in the calculator follow the flow of the hiring / firing process, from the recruiting, on-boarding to the realisation the new hire is not performing, through to the attempt at remediation and ultimately dismissal / termination.  There are options for you to choose, which provide a range of alternatives which might depend how you would expect YOUR firm to deal with these issues.

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