The Cost of Having the Wrong People on Your Financial Team

What’s the True Cost of the Wrong Fit?

Hiring a full-time employee to join your financial team is like entering a marriage—it is, you hope, a long-term commitment that will benefit both parties. When that relationship unexpectedly falls apart, the cost to businesses and nonprofits is higher than you might think, not only in hard costs but also in lost morale and other soft costs.

The hard costs

Every new employee is an investment and a costly one at that. Before the hire, hours are spent reviewing resumes, conducting interviews, and performing background checks. After the hire, days or weeks are devoted to training the new employee, and if the employee doesn’t work out, you have to go through the costly search and training process all over again.

In addition, if a hire isn’t meeting expectations, that means your organization is suffering from poor productivity, as well as suffering opportunity costs related to what the employee should be doing well but isn’t. On top of that, there’s the added cost of intervention—meeting with the employee, developing plans for corrective action, and redirecting other employees from their responsibilities to cover for the poor performer’s faults.

Soft costs

Those hard costs are only the beginning. If your new hire is disengaged or burned out, if they have bad work habits or bad morale, it’s likely, if not inevitable, that their attitude will spread to the rest of your financial team.

If you’re lucky, you’ll notice the issue right away and take steps to correct their behavior or remove them from your organization before they damage your culture. Often, though, months go by in which managers struggle to pinpoint the issue and then devote precious time and resources to figuring out which actions to take. Throughout that process, negative attitude could be spreading.

What are your options?

All of this is not to suggest that you should never hire a new employee. Rather, recognizing the extremely high cost of the wrong fit will hopefully inspire you to devote more time and energy to establishing excellent hiring practices that reduce the likelihood of making a hiring mistake. You might also consider outsourcing some financial responsibilities as an alternative to hiring full-time employees.

Make the right decision for your organization

Insero & Co. is a public accounting firm with decades of experience working with both nonprofits and businesses. Whether you need recruiting assistance or business consulting, our experts are available to help.