Most businesses can tell you how much they spend on recruitment, salaries, training and employee benefits. What they generally cannot tell you is how much they spend dealing with employees who don't perform as expected, behave inappropriately or ultimately leave under difficult circumstances.
Those costs are real, but they are usually absorbed into the everyday expenses of running the business rather than identified as a separate cost of employing the wrong people.
Some recently
published figures from ANZ provide an interesting illustration of just how substantial these costs might be.
What ANZ's Numbers Tell Us
According to ANZ's
2026 Annual Report, the bank recorded 2,204 employee relations cases involving alleged breaches of its Code of Conduct during the financial year. This represented an increase of approximately 40 per cent on the previous year.
Of these cases, 670 resulted in formal consequences or employees leaving the organisation. Specifically, 139 employees were dismissed, 405 received warnings and another 126 left the bank.
With a global workforce of approximately 40,000, the 2,204 cases are equivalent to around 5.5 per cent of the workforce, although this does not necessarily mean that 5.5 per cent of employees breached the Code of Conduct. Some cases may have involved the same employee, and an allegation does not establish misconduct.
ANZ also reported that the increase was largely associated with a greater focus on compliance with its office attendance requirements.
Nevertheless, the figures raise an interesting question.
What does it cost an organisation to investigate, manage and resolve this many employee relations matters?
The Cost That Doesn't Have Its Own Line in the Accounts
Consider the 265 employees who were dismissed or otherwise left ANZ following these investigations. Depending on their positions, the circumstances surrounding their departure and whether replacements were required, there could be substantial costs associated with investigating the issues, managing the departures, recruiting replacements, training new employees and recovering lost productivity.
Then there are the 405 employees who received formal warnings, which may have involved investigations, management time, HR support, documentation and ongoing monitoring.
Even the remaining 1,534 cases, which were not reported as resulting in a formal consequence or departure, would presumably have required some level of assessment and administration.
We don't know what ANZ spent dealing with these matters, but we can make some reasonable illustrative assumptions to understand the potential scale.
If we assign an average cost of $30,000 to each departure, $3,000 to each formal warning and $500 to each remaining case, the combined cost comes to approximately
$9.9 million.
These are hypothetical assumptions, not ANZ's reported costs, and the actual figure could be considerably higher or lower.
The interesting point is that these costs are probably already being incurred and recorded somewhere in the organisation's accounts, through salaries, recruitment expenses, legal fees and other operating costs. What is much less certain is whether they are
being identified collectively as the cost of employee conduct problems and unsuccessful employment relationships.
Without that information, it becomes difficult to understand the full financial consequences or determine whether additional investment in prevention would be worthwhile.
Nevertheless, the ANZ figures provide a useful reminder that the financial consequences of employee problems extend well beyond the salaries being paid.
For a smaller business, even one difficult employment relationship can consume considerable management time, disrupt other employees and reduce productivity, with consequences that are proportionately much greater than they would be for a large organisation.
Perhaps the question businesses should be asking is not simply how much they spend recruiting people, but
how much they spend when employment relationships don't work out, and how much of that cost could reasonably have been prevented.
If you are looking to improve the quality of your recruitment decisions,
Fermion provides psychometric testing to complement interviews and other selection methods, helping you make more informed decisions about the people you employ.
