How Much Did That Bad Hire Just Cost You? We’ll Tell You.
In Good to Great, Jim Collins states, “The most important decisions that employers make are not what decisions, but who decisions.” In an era where healthcare entities struggle to turn a profit, costs associated with one bad who is more than you might think.
The Price You Pay
Determining an exact dollar amount for the consequences of poor hiring decisions can be difficult, but according to data from the U.S. Department of Labor and other industry estimates, the price tag for hiring and ultimately having to fire someone can start at 24 percent of the first year’s annual salary. If you hire a physician at a salary of $240,000, start calculating your loss at a minimum of $57,600. The price tag then continues to balloon up from there depending on factors like onboarding and training, severance and unemployment, productivity losses, management time and wasted hours, repairing damaged relationships, the recruitment costs and anything else that is unique to your organization that represents a cost associated with mis-hiring. By the time you are done adding up the numbers, the cost is well into a six-figure loss. This is not something to take lightly.
The Ripple Effect
While the financial impact is quantifiable, chief financial officers actually rank a bad hire’s morale and productivity impacts ahead of monetary losses. A study based on interviews with 2,100 CFOs has determined that a bad hire can cause a reduction in productivity by 34 percent and a staff morale is degraded by 39 percent.
Additionally, even if you hire a physician or nurse with the right credentials, background and professional references, that doesn’t guarantee they will be a good fit with your patients. From conflicting communication styles and poor culture fit to different management goals, one of the costliest issues with a bad medical hire is the quality of patient care. In the age of Yelp and Google, all it takes is a few bad reviews for a practice’s reputation to suffer. Loyal patients may choose to go elsewhere, and new business can disappear with little to no warning. Once a practice’s reputation suffers, it will take time – and money – to clean it up.
Stop the Bleeding
Immediately, you need to stop that bad hire from destroying your bottom line any further. The time to reflect and look back at the clues and the red flags that were missed should happen later. Here are the steps you need to take now:
- Try to repair the situation with a clear concrete productivity plan
- Reassign them and capitalize on their zone of excellence
- Weigh the current and future expense of keeping the bad hire
- Make the case for an exception to the typical exit plan
Getting it Right Out of the Gate
Do you know the top trends shaping the future of recruiting medical professionals? We do. Furthermore, our recruitment agency will help you avoid the mistakes, headaches, and long-term expenses associated with bad hires by getting it right on the first attempt. Partner with one of our medical staffing professionals to find Physicians and Advanced Practice Professionals that will benefit the organization.