The Cost of a Bad Hire (and How You Can Avoid Making One)

It’s no secret that making a bad hire is one of the more significant fears hiring managers and the organizations they serve posses. But just how damaging can it be? How much does it really cost your business? How much does it hurt your career if you’re the one responsible for making it? 

In short, the answer is probably much more than you think, and, while there’s never a good time for a bad hire, today’s candidate-driven market can make those costs count double.

In this blog, we’ll share some insights and statistics behind the costs of a bad hire and tips on how you can ensure you avoid making one.

Costs Associated with Bad Hires

Few realize just how expensive and far-reaching the effects of a bad hire can be on an organization. Jörgen Sundberg, CEO of Link Humans, argues that the cost of recruiting, hiring, and onboarding a new employee can be as much as $240,000

While that figure may appear steep, and there’s, of course, a level of variance involved depending on the position, experience level, and other circumstances, analysts from Brandon Hall Group explain that the costs of a bad hire extend far beyond initial hiring expenses and ripple throughout an organization. These costs include:

  • Lost customers.
  • Disruption to incomplete projects.
  • Negative impact on team performance.
  • Damaged employer brand.
  • Outplacement service.
  • Potential litigation fees. 

Perhaps even more troubling than the quantifiable financial metrics is that half of all new hires (yes, even management and executive-level) fail within 18 months. There are two very telling observations about this data. First (and most obvious), you essentially have a fifty-fifty shot of choosing a candidate that doesn’t self-destruct and cost you a considerable amount of money, which is hardly encouraging if you’re the hiring manager. 

Secondly, the “18 months” isn’t an insignificant part of the statistic. Bad hires don’t always politely identify themselves as such hours into their first day; it can take a year and a half to prove themselves as such. 

If you’ve made several hires in the past months or several months, there’s still a potential (even if you don’t know it) that they will end up being inadequate for their role. We stress this point not to make the whole effort seem pointless, but rather to make it clear just how important everything you do before you make a hire is. 

Tips to Avoid Making a Bad Hire

Assess your job description

Beginning your search for a new hiring effort with the right job description is a critical first step. Too often, job descriptions are unclear, inaccurate, and ineffective, leading to unqualified or misqualified candidates being funneled towards your business (and maybe even getting themselves hired!).

Make sure your job descriptions represent the actual role as much as possible. Take time assessing the position as it relates to your specific organization; don’t merely copy and paste another posting with the same job title. Spend time with other team members and department heads related to the position and gather feedback to craft a more fitting description. 

Though it may seem obvious and reasonably simple to achieve, this step is nonetheless vital to maximizing the likelihood of getting the right candidates through your doors. 

Standardize the interview process

Recent studies have shown that 69% of companies, when they made a bad hire, did so based on a flawed interview process, and that organizations that lack a standardized interviewing process are five times more likely to make a bad hire than those that don’t.

If you’re able to attract quality candidates for a particular position, the last thing you want is an unorganized, incongruous, and complicated interview process muddling your chances of properly identifying the ideal hire. 

Plan out each stage of your interview process, from screening interviews to final interviews, and clarify what each stage should ideally achieve and design your process accordingly. Standardizing the questions you place in front of each candidate instead of an a la carte inspired free for all helps you to adequately compare and contrast interviewees from one another. 

Partner with a specialized staffing firm

There are few resources available to organizations that can help cut down on bad hires more than specialized staffing firms. The years of industry experience and expansive networks of committed, qualified professionals available to recruiters allows them to pinpoint the exact requirements of a specific position and source candidates who are an ideal fit. 

Struggling to make the timely, quality hires your business needs to thrive? US Tech Solutions is here to help. Get in touch with us today to learn how our extensive network of proven candidates and experience across multiple industries can help you overcome whatever hiring challenge your organization is facing.

275 thoughts on “The Cost of a Bad Hire (and How You Can Avoid Making One)

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