The Shocking Cost of a Bad Hire

By July 8, 2021 May 8th, 2023 Identifying Talent

Last Updated on May 8, 2023 by Dave Schoenbeck

Most employers know that the cost of a bad hire is high: the time and money you spend recruiting, interviewing candidates, onboarding, and training are just a few of the obvious sunk costs of a bad hiring decision. But there are huge, less obvious costs of a bad hire that you may not have considered. Here’s why a bad hire can devastate your business and what you can do to prevent it.

a man in a suit with a chainsaw he is cutting the cost of a bad hire

The Hidden Costs of a Bad Hire

The Department of Labor estimates that a bad hire costs approximately 30% of that person’s earnings their first year due to recruiting, training, onboarding, and starting all over again afterward.

However, hiring the wrong person for the job costs more than the money and time required to hire and train. Some experts claim that the actual cost is closer to $240,000! Here are some of the insidious effects of hiring unqualified employees:

  • It decreased team morale. A bad hire can negatively impact the culture of the company. When good employees see the new hire doing sub-par work or being toxic in the workplace, it can make them feel frustrated, irritated, or discouraged.
  • Productivity costs. Other employees must pick up the slack when a new employee is not contributing. This can cause burnout in your best employees. If the problem persists long enough, the good employees may quit. This can cause an even more significant load on existing workers and empty roles you must fill by recruiting, interviewing, and training. All these contribute to the cost of a bad hire in money, time, and energy.
  • Damaged client or customer relationships. Many positions interface directly with customers. If those employees are not up to the company standard, you risk that your employee damages your company’s reputation. Even those employees who don’t work directly with customers could impact the quality of service or products that, ultimately, leave a customer displeased.

How to Avoid Bad Hires

The best way to deal with bad hires is to do your best to avoid them in the first place. Here are a few steps you can take to help you avoid the cost of a bad hire:

  • Background checks are non-negotiable for new hires.
  • Conduct multiple interviews with more than one person to gain different perspectives.
  • Find out how the potential employee fits in with the company culture and current employees by planning to meet in person before hiring.
  • Create thorough and accurate job descriptions and review them with the candidate before hiring.
  • Conduct behavioral assessments before hiring.
  • Move fast during the hiring process, but don’t take shortcuts. Move swiftly enough not to lose quality candidates but slowly enough to think and talk through decisions with colleagues before moving forward.
  • If possible, have a trial period before offering a permanent position.
  • Create a list of specific goals for candidates to review before taking the position and working toward their first 90 days of employment.
  • Learn from prior hiring mistakes. Of course, we all make hiring mistakes, but those who don’t learn from them risk making them again.

Hiring a fantastic business coach is an excellent way to avoid the Armageddon of the cost of a bad hire. So schedule a call to receive a free coaching session to learn more about building the right team for your business and avoiding costly mistakes.

Coach Dave


Dave Schoenbeck
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