The estimated real cost to a company when a newly-hired customer-facing or middle management executive leaves within three months is about $60,000 according to detailed new research from Futurestep.
A study of data from Futurestep clients, covering more than 50,000 employees, also found that as the role became more senior, calculating the impact of a bad hire became increasingly complex, and the cost rose exponentially.
Futurestep head of consulting Matt Dale said the $60k figure was conservative.
He said many organisations only considered the direct costs of replacing a failed hire, like job ads and agency fees, but these were often insignificant compared with the indirect costs.
"There are also indirect costs like the HR/recruitment team, hiring manager time, technology costs, induction costs and the loss of productivity while they get up to speed."
And perhaps more important, Dale said, are the opportunity costs of having that position open, and the potential of lost intellectual property and disruption to the workplace.
"Yes, recruitment looks expensive", Dale said, but the hidden, long-term cost of working with a broken system was in reality much higher.
"Organisations need a dual approach. Important vacancies need to be filled quickly and with the right person. In parallel to that, organisations also need to fix their overall system and processes."
