It's virtually impossible for most companies to manage someone out in less than six months. They're earning full freight salary for each of those six months. Many of your overhead costs like e.g. recruiting fees, new machinery, training, come due within that period and are not refundable.
This only costs actual cash outlay, not opportunity cost of other team members (could be coding but are instead spinning up the new engineer), overhead from management salaries, cost to redo work of an other-than-productive employee, etc.
At Valley salaries hiring someone for a day costs you $100k++. In more moderately compensated locales, lower bound it at $40k or so.
"Managing someone out" is a large company concept. Once they realize the mistake, the owner of a small company can get rid of somebody immediately. It can take surprisingly long to realize there's been a hiring mistake, though.
>>At Valley salaries hiring someone for a day costs you $100k++. In more moderately compensated locales, lower bound it at $40k or so.
Sorry, WHAT?
>>pportunity cost of other team members (could be coding but are instead spinning up the new engineer)
Hey I've got news for you. Developers don't just waltz in and start coding from day 1, they need to be brought up to speed on the systems. Your business-nosed attitude needs a reality check. Developers are human capital, not robots.
> Your business-nosed attitude needs a reality check. Developers are human capital, not robots.
You're being unnecessarily defensive. Just because people are people does not change the fact that it costs companies money to onboard them. This whole subthread is "why is it expensive to hire people?" and one part of the answer is "because you have to pay them money while you train them, and pay their colleagues while they do it". It's not a reflection of any unrealistic expectations--it's the opposite.
> Sorry, WHAT?
Computer, desk, office space: $5k
Job ads: $500-3k per hire is not unrealistic
Time spent sifting through applications: Easily 5 hours per week. If the posting is up for a month, that's 20 hours. That translates to about $1.5k in fully loaded costs for an employee with a $100k salary.
Time spent conducting phone screens: Assume 50 phones screens for one position. 30 min per person (20 minute conversation, 10 minute notes/break). 25 hours. Approximately $1.8k for the same $100k employee.
Further interview rounds: Assume about 10 candidates per position. Assume at least 4 person-hours per candidate, plus at least 8 hours devising evaluations (programming tests or what-not). 48 hours = ~$3.6k. Add in $1k of travel costs per candidate = $10k.
Draw up an employment offer. Assume you've got a stock one, but the new hire would like to make an amendment. Run it by a lawyer. $500.
We're at about $25k. It's not $40k, but it's not free, either. It would be easy to spend more time on any of those steps. If you use a recruiter, it will be higher. If you calculate based on SV salaries and costs, it will be higher.
If that's the figure, then maybe bad hires really aren't that bad. Presumably the company won't have gotten zero or negative value from a bad hire, and even if it was $0, $25k isn't going to make or break any but the scrappiest bootstrapper.
The grandparent post was pointing out that once you've decided to hire someone for one day they'll probably be around for at least 6 months. That's where the majority of the cost comes from.
1. the project slips while you expect your new hire to work, and they don't deliver.
2. opportunity cost of actually hiring someone good - by the time you've realized you've made a mistake, a good person is off the market.
3. you actually have to pay a bad hire for their time. you can't just not pay them. that's cold hard cash out the door.
4. everyone on the team starts wondering, how the hell did this guy make it through this process? are we being run by idiots?
5. if the hire is remote in another state, you have to register your business with their tax authorities, and deal with that whole payroll rigamarole.
6. also health insurance bullshit.
7. setting up accounts, changing passwords/keys when they get canned.
8. actually firing them is not fun unless you are a total sociopath, or they are actively causing damage by destroying value (which is extremely rare -- most people will just silently not do a fucking thing for weeks on end).
9. worrying about a lawsuit because ironically, people who cause damage like to threaten these things.
this is on top of your already full workload of doing actual, productive things for actual paying customers and good employees.
We are a small information security consulting boutique. We are interviewing and hiring more than one person. For a small team making good hires is a big deal (most teams are small, even if the organization is large).
I don't know how else to do it, especially when it is really rare for someone to have the skills we need out of the gate. That means testing (we have a testing process) and time talking with candidates. On the other side, streamlining things, we have made hiring missteps in the past, which had measurable and high cost to the business. For us at least, it isn't hot air. Hiring is a hard problem. We spent a lot of time trying to optimize it to find an ideal way that costs less time.
Consider this: every hour a consultant is interviewing they arent doing research or billable work. So we believe strongly enough in how we do things to put our money where our practices are. Maybe the economics for the Googles of the world are different, but for us it is a real decision to be made.
Can you quantify? I read this all the time but nobody explains it.
Meanwhile, this talking point is used to justify an atrocious waste of interviewee time and ridiculous interview requirements.