Cost of a Failed Hiring

Failing to recruit the right person, which occurs when a recently hired person must be replaced, has both direct and indirect economic costs.

It has been estimated that direct economic costs of replacing a bad hire is between 50% and 175% of the person's annual salary which, even on the high end, can be conservative, recognizing that salary alone does not entirely reflect an employee's total compensation. Wages and salaries constitute 69 percent of total compensation, while benefits account for 31 percent.

Based on the foregoing, let's assume an academic health center has hired a cardiothoracic surgeon with an annual salary of $550,000. Excluding any sign-on bonuses, or other hiring incentives, the total first year compensation for the surgeon would be $720,500. Now, let's say at the end of the first year it becomes clear the surgeon is a cultural "misfit" and is "let go." Thus, it will now cost between $360,250 and $1,260, 875 to replace the surgeon who was hired just a year ago.

Meanwhile, the indirect costs associated with a failed hire are hard to quantify but, at a minimum, they include the following:

Based on the foregoing direct and indirect costs, hiring misfires must be avoided and, to every extent possible, eliminated as even a remote possibility. This can only be accomplished when a knowledgeable intermediary, who separates the job candidate from the potential employer, is directly involved in the recruitment process. In this regard, the only organization in the world providing the required services in a knowledgeable manner to the transplant community is the United Network for the Recruitment of Transplantation Professionals (UNRTP). We know the people, the programs, and the problems. Our goal is to eliminate the nonsense, and help build functional transplant programs.