A GREAT HIRE CREATES 2-5X MORE VALUE THAN A BAD HIRE (AT MINIMUM)
Occasionally, you'll get asked - does it really matter who you hire?
The answer is yes - more than you realize.
Principle 44 is why.
Every person you hire will create value for your company - at least you hope.
Ideally, they create at least more value than what you're paying them. Otherwise, why would you hire them?
Unfortunately, many hires don't achieve this outcome.
Why? Here's 3 reasons.
It's estimated to cost 30% of an employee's annual salary to replace him/her, according to the Department of Labor.
Employees also often take 1-2 months to train / onboard before contributing (i.e., another 10-20% of their salary).
That means an employee who turns over in their first 3 months may cost you almost half of their salary!
2) POOR QUALITY WORK
A bad hire produces poor quality work. Poor quality work brings a host of likely additional costs:
- For one, that employee will require more training, supervision, and re-work till they get it right (all of which bear their own cost).
-Additionally, poor quality work negatively impacts customers, employees, or whoever it is that is supposed to benefit from that work that would otherwise be of a higher quality.
3) NEGATIVE IMPACT ON OTHERS
Lastly, just as a good hire, a bad hire impacts those around them. If you think one bad attitude employee is bad, just wait till he/she infects those around them. That's where the worst costs come.
When taking into account all costs (as well as the opportunity cost), we estimate that a good hire creates at 2-5 times more value (or ROI) than a bad hire - AT MINIMUM.
Don't forget this when you're making your next hire. Yes - who you hire matters. A LOT.