April 26, 2023

How Dearly Can a Bad Hire Cost You?

cost of bad hires

From screening and interviewing candidates to eventually offering them the positions, so many hiring decisions can go wrong during the recruitment process leaving you onboarding the wrong person. The hiring process is costly but if you end up hiring someone who doesn't fit in the company culture, who has a negative impact on other employees, doesn't have the necessary skills, offers poor work quality, or is just not up there, it can cost you in the long term and very dearly too. Companies spend a lot of time and money on the hiring process and if their process has flaws and continuously lands bad hires, a lot of fortune is bound to be wasted for nothing.

A bad hire typically refers to a wrong employee who is hired but then turns out to be a poor fit for the company or the role they were hired for. This can be due to a variety of factors, such as a lack of skills or experience, poor work ethic, a negative attitude, or a mismatch in company culture.

The Real Cost of a Bad Hire

The cost of bad hires can be significant for a company. Here are some potential costs that a company may incur due to a bad hire which are discussed below.

Recruitment Costs

Recruitment Costs

When a company is looking to fill a job position, they have to spend time and money on activities such as advertising the position, reviewing resumes, and conducting interviews to find a suitable candidate. If the person hired for the job does not meet the requirements or is not a good fit for the company, then the resources spent on these activities will be wasted.

The company will have to start the recruitment process all over again to find a new employee, incurring additional costs and time. Additionally, a bad hire can have a negative impact on the company's performance, productivity, and employee morale, which can further increase costs and hurt the company's bottom line. Therefore, it is important for companies to have an effective hiring process that ensures they hire the right candidate for the job.

Training Costs

Training costs

When a company hires a new employee, they invest time and money to train them for their new role. This training can include teaching the employee specific skills, familiarizing them with the company's procedures and policies, and helping them adapt to the work environment. However, if the employee turns out to be a bad hire, they may struggle to learn quickly or may require additional training, which can increase training costs and reduce productivity.

If the employee is not able to learn quickly, it can take longer for them to become fully productive in their role. This can lead to lower productivity levels and a negative impact on the team's performance. Additionally, if the employee requires additional training, it can increase the costs associated with training, such as the cost of materials, equipment, and personnel. This can further reduce productivity and increase costs for the company. So a bad hire doesn't just cost money while being hired, keeping and training him also costs you more bucks than others, and even then a bad hire might just not reach a competitive level.

Reduced Productivity


A bad hire can have a negative impact on the productivity of the team or the company. A bad hire may lack the necessary skills or experience to perform their job effectively, which can lead to mistakes and errors that require additional time and resources to fix or complete tasks.

Lower Employee Morale

A bad hire can also negatively impact the morale of the team or the company. The other team members may need to spend additional time fixing the mistakes made by the bad hire, which can lead to frustration and demotivation. This can further reduce productivity and make it difficult for the team to achieve their goals.

Termination Costs

Termination costs

If the company decides to terminate a bad hire, it can incur additional costs, such as severance pay or legal fees. Not only keeping a bad hire is costly but even offboarding them costs a fortune too. There might be clauses and deals in the contract that can bind the company to compensate the bad hire financially.

Reputational Damage

Poor performance of a bad hire can become known to clients or customers, leading to a damaged reputation and potential loss of business.

Cultural Impact

Cultural impact

Culture refers to the shared values, beliefs, and behaviors of a group of people. A bad hire who does not share these values or who behaves in a way that is not aligned with the company's culture can lead to a cultural clash. This can create a toxic work environment that can negatively impact employee engagement, resulting in lower productivity, increased absenteeism, and higher turnover.

How Not to Land a Bad Hire

There are several ways to ensure that a company does not make a bad hire.

Use data-driven recruitment

Using data-driven recruitment involves using objective data to assess candidates during the recruitment process. One way to do this is by using pre-employment assessments, which are standardized tests or questionnaires that evaluate a candidate's personality traits, cognitive abilities, and job-related skills. Data-driven recruitment is the very first measure you can take to avoid landing a bad hire. Read why your HR team should use recruitment analytics to keep your hiring data-driven.

Personality assessments can provide insight into a candidate's behavior, values, and work style. They can help to determine if a candidate is a good fit for the job and the company culture. Examples of personality assessments include the Myers-Briggs Type Indicator (MBTI), the Big Five personality traits, and the DISC assessment.


Cognitive assessments, on the other hand, measure a candidate's cognitive abilities, such as problem-solving, critical thinking, and attention to detail. These assessments can help to determine if a candidate has the intellectual capacity to perform the job successfully. Examples of cognitive assessments include the Wonderlic test and the Watson-Glaser Critical Thinking Appraisal.

Job-related assessments evaluate a candidate's skills and knowledge related to the job. These assessments can help to determine if a candidate has the necessary skills and knowledge to perform the job successfully. Examples of job-related assessments include skills tests, knowledge tests, and work samples.

Thoroughly review resumes and cover letters


When reviewing a candidate's resume and cover letter, it's important to pay attention to the details as they can provide insight into the candidate's attention to detail and overall professionalism. Below are some things to look for.


Check for inconsistencies between the resume and cover letter. For example, if the candidate claims to have certain skills or experience in their cover letter but doesn't list them on their resume, it could be a red flag.

Gaps in employment

Check for gaps in employment on the candidate's resume. While gaps in employment are not necessarily a bad thing, it's important to ask the candidate to explain them to ensure there are no issues that could impact their ability to perform the job.

Typos and grammar mistakes

Look for typos and grammar mistakes in the resume and cover letter. While a few mistakes are understandable, too many can be an indicator of a lack of attention to detail or unprofessionalism.

Relevant experience

Check if the candidate's previous experience is relevant to the job they are applying for. If the candidate has experience in a different field or industry, it may not be a good fit for the job.

Conduct multiple rounds of interviews


Conducting multiple rounds of interviews with the candidate is a crucial step in the recruitment process. It allows hiring managers to gather more information about the candidate's skills, experience, and personality traits. Below are two types of interviews that can help assess these aspects.

Behavioral interviews

This type of interview focuses on past behavior and experiences to determine how a candidate would handle certain situations in the workplace. Hiring managers ask questions that elicit specific examples of how the candidate has handled challenges or achieved success in their previous jobs. The goal is to gain insight into the candidate's problem-solving skills, work ethic, and ability to work well in a team.

Situational interviews

This type of interview presents the candidate with hypothetical scenarios that they may encounter in the job they are applying for. The goal is to assess the candidate's problem-solving skills and ability to handle difficult situations. Hiring managers can evaluate the candidate's communication skills, decision-making abilities, and creativity.

Check references


Verifying a candidate's work history and performance by contacting their previous employers and other references is an important step in the recruitment process. It can help to confirm the information provided by the candidate and provide additional insights into their skills, work ethic, and behavior in the workplace. Chances are that if a person is potentially a bad hire, previous employers won't have many good things to say about the person. Here are some key things to keep in mind:

Contact previous employers

Reach out to the candidate's previous employers to confirm the information provided in their resume and cover letter, including job titles, dates of employment, and responsibilities. Ask about the candidate's performance, strengths, and areas for improvement. It's important to ask open-ended questions to encourage the employer to provide detailed and honest feedback.

Ask for references

Ask the candidate to provide references who can speak to their work performance and character. These references can be previous colleagues, supervisors, or clients. Ask about the candidate's work style, communication skills, and ability to work in a team. It's important to ask for references that the candidate has worked with recently to get a more accurate picture of their current skills and performance. Asking for references can very much decrease the chances of a bad hire.

Verify education and certifications

If the candidate has listed education or certifications on their resume, verify that they are accurate and up-to-date. You can contact the educational institution or certification provider to confirm the candidate's credentials.

Involve multiple stakeholders


Involve multiple stakeholders, such as managers and team members, in the recruitment process to ensure not landing the wrong hire eventually ruin the whole culture of the workplace.

Conduct a background check

Conduct a background check to ensure that the candidate has a clean record and no criminal history that could be detrimental to the company's reputation. A bad hire most probably has a history of a bad reputation in different firms.

Provide a realistic job preview

Provide a realistic job preview to the candidate, including the job requirements, working conditions, and company culture, to ensure that they have a clear understanding of the job and the company before accepting the offer.

Read how you can write a great job description.

What to do when you Realise you Made a Bad Hire?

You have identified a potential problem, the bad hires are underperforming, their work is messy, and other employees are complaining. So, what’s next? Should you tell them directly that it is not working out, and start the hiring process all over again? No! Not always. There are some things you can try first:

1- Communicate and find their main problem: Try to talk to them and find out their weak points and where they are struggling.  

2- Ask for feedback: Schedule a meeting and clarify to them that you want their feedback and that their honesty is important to you. Guarantee them that their feedback will be kept confidential.

3- Give them feedback: Observe them throughout their task completion, highlight and discuss their mistakes, be specific and constructive, and let them know what is expected of them.  

4- Help them improve in their position: Assist them in how they can overcome the issues, and work on their skills.  

5- Double-checking if there is any training issue: Sometimes a specific training program provided to the new hire is insufficient for their job responsibilities. Review and make sure they get clear instructions and adequate training.  

6- Extra support or training: They might need additional guidance to help them slowly overcome their weak points. Give them a clear development plan and offer to coach and mentor them.  

7- Consider alternative roles: If the employee is underperforming and is not making progress, they might not be fit for the role assigned to them. You can try considering different job roles better suited to their interests.

Frequently Asked Questions (FAQs)

How do you calculate the cost of bad hires?

Calculating the cost of a bad hire involves considering the expenses associated with hiring, onboarding, lost productivity, turnover, and damage to company culture. It is important to factor in the cost of training, decreased productivity, and the potential impact on team morale and engagement. Companies can estimate the financial impact of a bad hire by adding up these costs. A thorough recruitment process can help prevent bad hires and ultimately save the company money in the long run.

When should you fire a bad hire?

Firing a bad hire should be considered when the employee is not meeting job expectations despite feedback and support, is causing a negative impact on team morale or culture, is violating company policies, or is not aligned with the company's values. It is a difficult decision but necessary to act in the best interests of the company and team. It should be done with compassion and professionalism while following legal requirements and company policies. It is important to document the reasons for the termination.

What is the average cost of a bad hiring decision?

The cost of a bad hiring decision can vary depending on the role, industry, and company size. However, studies have shown that the cost can range from 30% to 150% of the employee's annual salary. For example, if an employee has an annual salary of $50,000, the cost of a bad hire could range from $15,000 to $75,000.

How do you know if you have a bad hire?

A bad hire can be identified by signs such as a lack of productivity, poor quality of work, negative impact on team morale, lack of engagement, and misalignment with company values. It is important to address the issue with the employee and provide support and feedback to help them improve. However, if the employee is not able to improve despite efforts to support them, it may be necessary to consider termination.

How do you screen toxic employees?

Screening for toxic employees can be challenging, but steps such as conducting thorough reference checks, using behavioral assessments, asking behavioral interview questions, looking for warning signs, and checking social media can help to identify potential issues before making a hiring decision. It's important to remember that this is not foolproof, but taking these steps can help to minimize the risk of hiring a toxic employee.

Share This Post

What do people say about us?

Hirecinch is one of the best applicant tracking system I have used ever, literally my my job easier

Hirecinch is one of the best applicant tracking system I have used ever, literally my my job easier

Hirecinch is one of the best applicant tracking system I have used ever, literally my my job easier

Hirecinch is one of the best applicant tracking system I have used ever, literally my my job easier

Hirecinch is one of the best applicant tracking system I have used ever, literally my my job easier

Hirecinch is one of the best applicant tracking system I have used ever, literally my my job easier

Hirecinch is one of the best applicant tracking system I have used ever, literally my my job easier