One wrong employee choice costs Indian companies over Rs 20 lakh: survey

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When it comes to companies making a wrong choice in hiring an employee, India figures among the top-four countries worldwide and the cost of one single bad recruitment could be over Rs 20 lakh, says a survey.

The chances of companies taking a bad hiring decision is highest in Russia, followed by Brazil, China and India at the top-four positions, while the US is at the fifth.

As per the study conducted by global human resource consultancy CareerBuilder, 88 per cent companies in Russia said they were affected by bad hiring last year, followed by 87 per cent in Brazil and China and 84 per cent in India.

The percentage of such companies in the US was much lower at 66 per cent.

The study further said that three in every ten Indian companies (29 per cent) reported that a single bad hire -- someone who turned out not to be a good fit for the job or did not perform well -- cost the company more than Rs 20 lakh ($37,150) on an average.

In comparison, 27 per cent of US employers reported that a single bad hire costs them more than $50,000.

As per the global study, hiring the wrong person can have serious implications for companies and more than half of employers in each of the ten largest world economies said a bad hire has negatively impacted their business.

This was in terms of a significant loss in revenue or productivity or challenges with employee morale and client relations.

"When you add up missed sales opportunities, strained client and employee relations, potential legal issues and resources to hire and train candidates, the cost can be considerable," said CareerBuilder CEO Matt Ferguson.

"Employers are taking longer to extend offers post-recession as they assess whether a candidate really is the best fit for the job and their company culture," he added.

According to the survey, BRIC countries were the most likely to report being affected by a bad hire last year.

In terms of loss of productivity due to a bad hire, China was at the top (57 per cent), followed by Russia (45 per cent) and India (42 per cent) in the top three.

China was on top in terms of negative impact of bad hiring on client relations, as well as for adverse impact on sales, while India was at second place on both these metrics.

Brazil saw the worst impact on recruitment and training costs because of bad hiring. It was followed by the US, India, China and Russia in this regard.

However, India fared relatively better at fifth place after China, US, Germany and Japan in terms of negative impact of a bad hire on the morale of other employees.

The survey was conducted online within the US, Brazil, China, France, Germany, India, Italy, Japan, Russia and the UK by research firm Harris Interactive on behalf of CareerBuilder among 400 to 2,611 hiring managers and HR professionals in each country. 

Story first published on: May 12, 2013 13:34 (IST)

Tags: Hiring, Employment, Recruitment, India, Russia, Brazil, China


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