The Real Cost of a Bad Hire and How to Avoid It

The Real Cost of a Bad Hire and How to Avoid It

Your employees are the frontrunners of your business. That’s why the cost of a bad hire is not only limited to money, it can also have a significant impact on your organization’s productivity. Hence, it is critical to implore best practices when recruiting and hiring new employees. This blog discusses the several factors that may lead to bad hiring and how it affects your business in the long run.

Hiring the wrong employee can easily lead to significant financial loss, decreased productivity, and cultural degradation, which poses significant risks to a company's progress. To prevent this, today's employers are fighting a real war, the "war for talent." They are going all out to obtain the best resources possible.

This entails reworking hiring processes and selection tools to make the best hiring decision. But what happens when employers end up with subpar employees despite spending millions to improve the hiring process?

To understand the real cost of a bad hire and how to avoid it in your organization, keep reading!

The real cost of a bad hire

The real cost of a bad hire varies depending on factors such as industry type, employee salary, recruiting resources, onboarding and training, lost productivity, and so on. According to the U.S. Department of Labor, a bad hire can cost your company 30% of the employee's first-year earnings. Some HR agencies estimate the cost to be higher, ranging from $240,000 to $850,000 per employee.

"It's not just about their pay or salary, but also about the resources used to train and onboard them, which in some cases can exceed the employee's pay in monetary expense," said Jonathan Hill, Chairman, and CEO of The Energists.

So, we can say that the cost of a bad hire is beyond money. You can estimate the cost of a bad hire by considering these factors:

  • Recruitment advertising fees and staff time
  • Relocation and training fees for replacement hires
  • Negative impact on team performance
  • Disruption of incomplete projects
  • Lost productivity
  • Lost clients
  • Training costs
  • Legal fees

How to avoid hiring a bad candidate

This high-risk situation places intense pressure on HR teams to make the right hire. The traditional screening-selection-interview process, often carried out manually by recruiters, may no longer be viable. Therefore opting for deep jobs platforms can be a better choice for companies who want to avoid bad hires and reduce the overall cost of recruitment.

One of the most significant barriers to hiring the right people is the inherent subjectivity in the selection process. It ranges from the hiring manager's psychological biases to the inability to quantify competencies.

ways to overcome hiring obstacles

Some ways to overcome these obstacles include:

  • Writing a clear job description
  • Paying job search websites to post a job ad
  • Screening resumes for the right work experience
  • Following up with qualified applicants that applied
  • Performing background checks
  • Negotiating annual salary and sending offers quickly to candidates

Along with the above-mentioned pointers, here are some procedural changes HR managers have to introduce in their hiring processes to avoid hiring a bad candidate.

Articulate two sets of skills: Prerequisites and trained

Prerequisites are the skills an applicant should be able to exhibit in the interview. New hires won't receive training in these skills, even if they are necessary for the position. They can be as broad as prior experience working in a newsroom or as specific as proficiency with a particular piece of audio engineering software. The training abilities will be picked up on the job; prior experience is preferred but not always necessary.

Reduce the chatter in interviews

Make the interview more about asking candidates to demonstrate their necessary skills rather than asking open-ended questions that provide little insight. "What experience do you have coding in XYZ language?" reveals more than "What do you do when disputes arise at work?"

You can ask those other questions after the skills have been demonstrated, but it’s less relevant for someone who cannot demonstrate an ability to do the work.

Make subjective ‘soft skills’ objective.

Qualities such as "cultural fit" and "team player" are somewhat subjective; each company defines "team player" differently. Breaking these soft skills down into their constituent parts will help.

What qualities do you look for in a team player or a cultural fit? Name those characteristics to make them more concrete, and then ask yourself if you see them in your candidate. Ask behavioral interview questions that will help you see these characteristics in your candidates.

Narrow the list with job requirements

It is critical to have candidates help you narrow down your list. Post job requirements like "willingness to work on weekends" or "willing to travel." Another excellent option is "willingness to work at nights."

Any potential candidates who refuse to meet these requirements will not be invited to an interview, saving you time and money and lowering the risk of hiring the wrong person.

Figure out what went wrong last time

Your mistakes with the previous hire can help you avoid them in the current selection process. If the bad hire lacked key success skills, ask objective questions about those aspects of the job.

If the bad hire worked too slowly to meet your output requirements, ask candidates how long it takes them to complete certain key tasks. To find a suitable new hire, compare your candidates to these criteria.

Ask for references – and contact them

A job candidate may come into an interview bragging about a skill set only to fall short once on your team. Seek recommendations to avoid this disaster and save your organization the cost of a bad hire. These reference checks can reveal the truth behind a candidate's story.

Don’t rush your hiring process

Hiring a new employee gradually rather than rushing to fill a position is an excellent way to avoid the expense of a bad hire. Your team may be thinly spread with fewer employees than usual, but a bad hire is not the answer.

A wrong hire will only temporarily alleviate your problems before returning you to square one. Take your time and you'll save money on a bad hire.


Finding qualified candidates who are high performers is challenging, so there is no reason to berate yourself. However, it is critical to understand the costs of hiring the wrong person and how to avoid it. The cost of a bad hire is beyond money and coupled with substantial financial losses. A bad hire can also affect the organization’s productivity and reputation.

So, what’s the solution? Is it possible to avoid bad hires and hire the best candidates in a short time?

The answer is Yes. It is possible with Turing’s AI-based Intelligent Talent Cloud, which provides firms with pre-vetted developers for half the price. Using AI-based Intelligent Talent Cloud, Turing’s deep jobs platform source, vet, and match you with world-class software developers, removing all onboarding hassles from your head with a 2-week risk-free trial. So what are you waiting for, hire experienced software developers and start scaling your team.


  • Author

    Mohit Chaudhary

    Mohit is an Engineer turned tech blogger. He loves diving deep into the tech space and has been doing it for the last 3 years. He calls himself a cinephile and plays badminton in his free time. For more information, you can connect with him on Linkedin or Instagram.

Frequently Asked Questions

The cost of a bad hire is calculated by considering 3 important metrics i.e. time spent on hiring, cost of onboarding, and revenue loss.

A bad hire damages the company's reputation by negatively impacting employee morale. Which makes it difficult to attract good talent even in the future.

Recovery time from a bad hire can be different for different organizations depending on the company policies and the seniority level of the bad hire.

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