The Cost of a Bad Hire

Julie Shenkman
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As an HR professional, you know how much a bad hire costs your company in terms of dollars and cents. Unfortunately, they affect much more than your company's bottom line. Hiring the wrong people hurts morale, increases the workload of competent employees and even creates feelings of resentment toward hiring managers or the HR department. Here are just some of the ways a bad hire can hurt your company.

The wrong hiring decision has a significant financial impact. In fact, 27 percent of employers surveyed said they lost a minimum of $50,000 per bad hire. Not only did you spend time and money advertising the job opening and interviewing all of the qualified applicants, you probably also spent money conducting a background check, purchasing equipment and training your new hire. The cost of each activity in the hiring process adds up over time, making it critical that you do your due diligence during the search process.

If you hire someone who doesn't have what it takes to do the job, productivity is bound to suffer. If other employees are always busy helping the bad hire, they don't have enough time to finish their own projects. In some cases, an entire department has to stay late or work on weekends to make up for the lost productivity. Help avoid this problem by conducting thorough reference checks as part of your hiring process before making formal offers.

Replacing a bad hire is a costly undertaking. You might need to give the employee a severance package if you want to part on good terms. Then you have to advertise the position in your local newspaper or on national job-search websites, spend time reviewing all of the applications you receive, and interview the top two or three candidates. Once you identify the best candidate, you have to pay for background checks and clearances all over again.

In some cases, a bad hire is perfectly competent but just doesn't fit in with the organizational culture of a company. Poor fits cause conflict, especially when the new employee has a very different personality than you expected. You might notice an increase in the number of complaints your HR department receives, or you might have to mediate issues between the new hire and other employees. All of this hurts morale, making employees less productive and more likely to miss work.

If you are searching for a new employee, don't be too quick to make a decision. Hiring someone without taking the time to determine if they are a good fit is a recipe for disaster. Instead of rushing the process, get to know each candidate. Consider administering personality tests to find the best fit for your organizational culture. If you take all of these steps, you are far more likely to avoid a bad hire.

Photo courtesy of Stuart Miles at



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