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Two-in-Three Employers Report a Bad Hire Affected Their Business in the Last Year


By: 
Date: December 13 2010

CHICAGO, December 13, 2010 – As companies prepare their recruitment plans for 2011, avoiding bad hires will be a priority. With unemployment hovering around 9.5 percent, the job market is flooded with qualified candidates. Yet even with all the top talent available, time pressures, strained resources and a lack of insight into target talent have been a challenge to employers to find the right people for their open positions. Two-in-three (67 percent) companies report that a bad hire has adversely affected their business in the last year. Poor hires can be costly too, as nearly one-in-four hiring managers (24 percent) said one bad hire cost their business more than $50,000 in the last year. Four-in-ten said that one bad hire cost them more than $25,000. The nationwide survey was conducted among more than 2,400 employers between August 17 and September 2, 2010.

When asked how a poor hire affected their business in the last year, employers reported the following:

• Lost time to recruit and train another worker – 39 percent
• Less productivity – 38 percent
• Lost money to recruit and train another worker – 37 percent
• Had a negative effect on employee morale – 30 percent
• Had a negative effect on client relations – 21 percent
• Fewer sales – 11 percent
• Legal issues – 9 percent

“Among other things, hiring the wrong talent for a position can have a significant effect on an employer’s bottom line,” said Jamie Womack, vice president of corporate marketing for CareerBuilder. “To help proactively prevent bad hires, and their impact on the business, employers are exploring new ways to leverage target talent data and research in their hiring process.”

Of employers who made a bad hire, 36 percent said they think they made a mistake hiring someone because they needed to fill the job quickly, followed by lack of understanding of where their target talent is (20 percent) and unsuccessful sourcing techniques (9 percent).

Understanding who target talent is and how they will fit into an organization is increasingly important as hiring costs increase. Fifty-eight percent of employers have an average cost per hire of more than $1,000, up from 29 percent in 2008. Nearly one-in-ten (9 percent) estimate their cost-per-hire at more than $10,000. Specialized areas that are experiencing a shortage of qualified talent are reporting even higher recruitment expenses.  Eighty percent of IT employers said it costs them in excess of $1,000 to fill an open position. Sixty-six percent of health care employers said the same.

Survey Methodology
This survey was conducted online within the U.S. by Harris Interactive© on behalf of CareerBuilder.com among 2,457 U.S. hiring managers (employed full-time; not self-employed; non government); ages 18 and over between August 17 and September 2, 2010 (percentages for some questions are based on a subset of U.S. employers , based on their responses to certain questions). With a pure probability sample of 2,457 one could say with a 95 percent probability that the overall results have a sampling error of +/- 1.98  percentage points. Sampling error for data from sub-samples is higher and varies. 

About CareerBuilder®
CareerBuilder is the global leader in human capital solutions, helping companies target and attract their most important asset - their people. Its online career site, CareerBuilder.com®, is the largest in the United States with more than 23 million unique visitors, 1 million jobs and 32 million resumes. CareerBuilder works with the world’s top employers, providing resources for everything from employment branding and data analysis to recruitment support. More than 9,000 websites, including 140 newspapers and broadband portals such as MSN and AOL, feature CareerBuilder’s proprietary job search technology on their career sites. Owned by Gannett Co., Inc. (NYSE:GCI), Tribune Company, The McClatchy Company (NYSE:MNI) and Microsoft Corp. (Nasdaq: MSFT), CareerBuilder and its subsidiaries operate in the United States, Europe, Canada and Asia. For more information, visit www.careerbuilder.com.



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