Ropella 360
EXAMPLE CALCULATION
Level: COO | Salary: $250,000 | Annual Revenue: $40,000,000
Minimum Annual Cost of Bad Hire
*Does not include Reputational Damage and potential Legal Costs
Recruitment Cost
35% of Annual Compensation (includes search fees at 25% and administration estimated fees at 10%)
Lost Productivity
Calculation: Cost per day = 1/10th of % of Leadership Impact x Annual Revenue/250 Working Days per Year
Revenue Impact
Cost per day = Annual Revenue x % of Leadership Impact / 250 Working Days per Year
Severance Costs
50% Total Compensation (6 months’ salary + benefits)
New Recruitment Costs
35% of Annual Compensation (includes search fees at 25% and administration estimated fees at 10%)
Cultural Impact
50% Total Compensation
DISCLAIMER: The research and mathematical models used to develop these calculations were completed by the U.S. Dept. Of Labor and supported by research within various publications including: Harvard Business Review, C.E.O. Magazine, Forbes and by the SHRM (to list just a few of the sources we reviewed). It’s fair to admit that vacancy timelines, salary (and total compensation) levels, performance variables of individual contributors, the perceived importance of any individual vacancy, and other factors can affect the accuracy of the calculations. Therefore, averages were used to balance the numbers and make them as credible as possible. The principle point of the calculators is to demonstrate that you can determine a fair estimate of the costs.