Screening potential employees has become a must for Human Resource professionals and business owners alike. Losing an employee is already a pricey prospect, and when you add in the cost of hiring and training a replacement it can become a serious drain on company finances. This makes it incredibly important to heavily screen potential employees to lessen the chance of having to bring in a new replacement.
On average, it costs around $25,000 to replace a mid-level management employee. The cost for replacing other employees varies depending on compensation and required training and education, but one Center for American Progress study broke the costs down like this:
- For high-turnover jobs with compensation under $30,000 a year the cost is the lowest, coming in at about 16% of annual compensation. This leaves you with a max cost to replace an employee in this salary bracket of about $4,800, and a cost to replace a full-time, $10/hr employee of about $3,328
- If you’re replacing a mid-range management or other skilled position that requires a high-level of education, training, or both, expect to pay around 20% of the employee’s salary. This figure gives you a $8,000 cost to replace an employee making $40,000 a year.
- The upper limit to replace an employee comes for highly-educated and experienced employees at the executive level. Replacing employees at this level can cost large corporations as much as 213% of that employee’s salary. This would give you a cost of around $200,000 for replacing a CEO or VP making $100,000 per year.
The main takeaway here should be that replacing an employee is costly, and anything you can do to hire the right replacement the first time should the highest priority. Some other things you should be aware of are employees embellishing or outright lying about their credentials. A recent survey found that 58% of hiring managers had caught at least one person in a lie regarding their resume. To help the wary hiring manager, we offer full background investigations that include a detailed look into an applicants employment and education history.
All of this goes well beyond the typical range of information brought to you by simple online background checks. We delve deep into an applicant’s background, and can offer custom solutions that are sure to meet your needs. We can not only verify criminal background information, but we can verify professional qualifications, and credit history.