The True Cost of a Bad Hire (or a Recruiter’s Value Proposition)

“Our company doesn’t like to pay recruiting fees,” the president of a well-known plastics machinery company told me at a trade show. Hoping not to come across as impolite, I asked him if his clients liked paying hundreds of thousands of dollars for each of their machines? I was relieved when he laughed a little. “I suppose not, but when we explain the value to them they understand it’s an investment that will make them money.” I realized at that moment that recruiters often do not do a good job of explaining the value of the services we provide; hence we are perceived as a ‘cost’ to be avoided.

How much can a great employee benefit a company? When Facebook bought Instagram for $1 billion, Instagram had 13 employees. Author and self-made millionaire Darren Hardy says that if you think you cannot afford to hire A-players you’re wrong. They are the ONLY people you can really afford to hire because they are the only ones making money for your company. Hardy estimates that the true cost of a bad hire is about 6-15 times their annual salary, and you break even at best on your average employees.

Here is the value proposition: If you can recruit a top performer from within your industry, preferably from a direct competitor, that could mean hundreds of thousands, or millions of dollars added to your bottom line. We are far better positioned to help you make that happen, for several reasons. If Darren Hardy is correct, making a bad hire for a key position could easily cost you a million dollars. If you have a critical role where you cannot afford to mess it up, partnering with a recruiter who is niched in your space is both the highest quality and the lowest cost solution.