Salary paid for the period, plus statutory employer costs of roughly 11 to 16 percent depending on seniority, plus pro rated 13th month pay.
Then the cost of running the search again: the time to define, source, screen and interview, which for a role of any specialism is measured in weeks rather than days.
The widely cited figure is 30 to 200 percent of salary to replace a hire, depending on seniority. The lower end applies to roles with deep candidate supply and short ramp. The upper end applies where the person had accumulated context nobody else holds.
Cost & Pricing
What a failed hire in the Philippines actually costs
In short
Replacing a failed hire runs 30 to 200 percent of salary depending on seniority. In the Philippines the direct cost is lower than at home, and the indirect cost, management time and elapsed months, is higher because the time gap slows both diagnosis and correction.
Companies model the cost of hiring and rarely model the cost of hiring wrongly. The second number is larger and it is the one that should shape how much care goes into the first 90 days.
The direct cost
The cost that does not appear anywhere
Management time, which is front loaded and largely unrecoverable. The first 90 days of any remote hire consume meaningful attention from someone senior, and a hire that fails at month 5 has consumed all of it.
Elapsed time. The role was needed when you started. A failed hire at month 5 followed by a 2 month search means the requirement is 7 months old before the replacement starts, and 9 or 10 months old before they are productive.
Team effect. Where there are other hires, a departure at month 5 raises a question in everyone's mind about whether this arrangement is stable. That is a retention risk on people who were performing.
Elapsed time. The role was needed when you started. A failed hire at month 5 followed by a 2 month search means the requirement is 7 months old before the replacement starts, and 9 or 10 months old before they are productive.
Team effect. Where there are other hires, a departure at month 5 raises a question in everyone's mind about whether this arrangement is stable. That is a retention risk on people who were performing.
Why the time gap makes it worse
Diagnosis is slower. In an office, a mismatch is usually visible in weeks. Across a 7 to 16 hour gap, the signals are muted: work arrives, status updates are accurate, and the problem is that the work is not the right work.
Correction is slower. A course correction that takes a conversation locally takes a cycle of days remotely, and if the person is not raising problems, which is the common pattern, the loop is longer still.
The practical effect is that failed hires in this arrangement are typically identified later than they would be locally, which increases every component of the cost.
Correction is slower. A course correction that takes a conversation locally takes a cycle of days remotely, and if the person is not raising problems, which is the common pattern, the loop is longer still.
The practical effect is that failed hires in this arrangement are typically identified later than they would be locally, which increases every component of the cost.
Where failed hires actually come from
In our experience of what goes wrong generally, and consistent with what the market reports, most trace to the specification rather than the person.
An undefined role, where nobody could say what success looked like.
A shift arrangement that was acceptable at signing and unsustainable by month 12, particularly permanent night work.
No management capacity, so the person never received the context to become useful.
A mismatch between the role advertised and the role that existed.
Straightforward capability mismatch is a smaller category than most people assume, and it is the one most easily reduced by a proper assessment process.
An undefined role, where nobody could say what success looked like.
A shift arrangement that was acceptable at signing and unsustainable by month 12, particularly permanent night work.
No management capacity, so the person never received the context to become useful.
A mismatch between the role advertised and the role that existed.
Straightforward capability mismatch is a smaller category than most people assume, and it is the one most easily reduced by a proper assessment process.
What reduces it
Front loading the definition. The 90 day outcome test, whether you could both agree afterwards whether it happened, costs an hour and prevents the most expensive failure mode.
Deciding the shift before the job description, and being honest about it in the advertisement.
Probation used properly. Standards communicated at the time of engagement, reviewed formally partway through, and acted on before the period ends. Probation is capped at 6 months and an employee allowed to work beyond it becomes regular by operation of law.
Naming someone responsible for the person's first 90 days who is not the founder.
None of these are expensive. All of them are decided before anyone is hired.
Deciding the shift before the job description, and being honest about it in the advertisement.
Probation used properly. Standards communicated at the time of engagement, reviewed formally partway through, and acted on before the period ends. Probation is capped at 6 months and an employee allowed to work beyond it becomes regular by operation of law.
Naming someone responsible for the person's first 90 days who is not the founder.
None of these are expensive. All of them are decided before anyone is hired.
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