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The true cost of hiring the wrong employee.

April 21, 2016

As a small enterprise or even a start up there is nothing more valuable to your organisation than man (or woman) hours! Putting in the time and effort is what your company is built on and when you are dedicating upwards of 15 hour days to your vision you want to make sure that anyone you are paying, is also working to make that vision a reality.
But what happens when it goes wrong?
This is not advice on hiring per se, or indeed advice on when, where or how you should develop your team. The purpose of this article is to address the very real cost of getting it wrong, so as that we can then start to look at how we get it right.

1. The real financials

Boiling down the numbers of it, there are several expenses involved in any hire. Even more in a bad hire. So lets lay it all out here:

Salary – Before you realised you had a bad hire on your hands you committed to a salary package. This is still payable and whether you feel that you are getting the performance you expected or not, that salary is coming out of your bank coffers each month.

Additional Training – No one is likely to give up on a new hire at the first hurdle, so when the performance you expected doesn’t materialise it is important to look inward and support your new hire with training and courses that might develop their understanding and ability. This naturally will come at a cost, whether this is direct cost for the training or indirect cost in taking your time in additional support that hadnt originally been accounted for.

Visa – Not only do you need to cover the costs of processing the visa but also put a deposit with immigration for the length of employment. This can be a total cost of up to AED 9,000 for a standard UAE employment visa.

Visa cancellation – So if the bad hire turns into having to dismiss the employee completely there will also be the cancellation of visa fees and possible re-patriation costs to cover. Will you be replacing your lost hire? That’s a second visa to apply for too!

2. Productivity Costs – We touched on this in the financial effects of bad hiring. If you, as the business owner are having to spend more of your time away from your own desk in order to additionally train, support and assist your new hire, you are losing productivity from both them and yourself. As a small or start up business it is not unreasonable to assume that you, as the owner, are one of the main revenue generating members of the team, this drain on your productivity could easily have a disastrous effect on your numbers.

3. Reputation Costs – So, your bad hire has miss managed your clients, led them to question your companies capability and possibly integrity and you are now having to spend your time clearing up and performing damage control. The old addage has taught us that if someone receives great service they might tell one person, but if they receive bad service they will tell ten. Your reputation as a small business is still being developed and built on, and will likely be severley effected by an early dent like this.

4. Employee Morale – After all of the above is said and done the effect of it all on morale within your organisation cannot be under estimated. As the business owner your own morale is the glue that will keep any team you have together, and in the right frame of mind to deliver on your mission. Having said that, you have the most at risk and are most likely to be effected by the bad hire.
It cannot be over stated how important it is that you lead your team through any bad hire. Other team members witnessing the poor performance from the bad hire, potentially having to deal with some of the fall out from it, and not getting the same amount of managerial support whilst your time and efforts are sidelined on the bad hire, can easily become disgruntled and lose respect for their employer, the company, or the collective mission.

With all of the above in mind it is easy to see how that right hire is more important than you might initially think.
It is a daunting time, expanding your team as a small start up, it symbolises a large step in your company development, and though starting and growing a business of your own will be filled with mistakes and ups and downs, the reward from getting it right can be the unlimited success you set out for.
So now that you know the true costs of getting it wrong, how do you ensure that you get it right? Well, there is no back and white answer on that, and of course hiring anyone and expanding your team involves an element of risk but there are things that can be done to limit that risk and ensure getting the best fit possible. More on that to come….

About SwissGulf Partners:

SwissGulf Partners are experts in Digital and Tech recruitment. We love all things digital and tech! Actually we’re a bit nerdy about it, but above all else our talent is finding talent, and we’re not shy about it.

We are passionate about building relationships and pride ourselves on being personable, we are all human after all.

We understand what it takes to build award winning teams and businesses, we’ve done it time and time again.

We know that the key to this whole thing is in developing talent not just sourcing it, and we carry that with us through everything that we do.

We embrace ambition, we don’t listen to those who tell us we can’t – we already know that we can.

We work with ambitious people and dynamic companies. We’re a small group, making a big impact!

For more information about SwissGulf Partners and our recruitment services please visit