More Cost of Mis-Hires

In a previous post, I relayed that the cost of a mis-hire has been estimated to range between 6 and 27 times base salary, depending on assumptions. None of these assumptions considers the emotional disruption that a mis-hire creates if he or she has a difficult personality. In other words, no value is assigned to the emotional disruption created by a interpersonally difficult mis-hire. Omitting this cost of a mis-hire was my oversight.

A recent conversation with a CEO brought the oversight to my attention. In the case we spoke about, the mis-hire created bad feelings with both customers and employees as well as other members of senior management. Some of these bad feelings were just that–bad feelings. It is difficult to calculate the cost of someone being put off or upset. Other bad feelings have a cost that is relatively easy to calculate. For example, in the case the CEO mentioned, orders increased when the individual left the company because distributors had not wanted to deal with the mis-hire.

Other costs associated with emotional disruption can include the cost of replacing subordinates who leave because of the culture created by an emotionally abusive mis-hire or the loss of productivity associated with employees avoiding an abusive mis-hire.

Granted, not all mis-hires cause emotional disruption. Certainly there are individuals who are mis-hires and beloved despite their poor performance. But, more often, the obvious financial costs of a mis-hire tell only part of the story. Please comment or send questions using the contact page.