By: Helios on January 14th, 2010

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The True Cost of a Bad Hiring Decision

Talent Acquisition | TBU

the true cost of a bad hiring decisionAccording to, reports show that 46% of recruiters surveyed in the Mid-Southeast stated more than half their openings are difficult to fill. The current economic environment has created additional challenges for employers and recruiters when searching for potential candidates and making hiring decisions.

Problems Occur When You Make a Bad Hiring Decision

Hiring the right fit is critical to an organization's survival. One bad hiring decision is an enormous cost to the organization and goes beyond the initial salary and benefits investment.

The True Cost of a Bad Hire Includes:

  • recruiting costs
  • training
  • salary,
  • benefits,
  • reduced team productivity,
  • missed opportunities, and
  • the negative impact on top performers.

Dealing with underperforming employees is a psychological drain for the manager and a frustration for top performers. Organizations that are slow to address a bad hire experience a negative impact on employee productivity and increased risk of turnover of the high performers. Studies show the true cost of a bad hire is anywhere from one to five times the employee’s first-year salary.

Finding the right fit goes beyond identifying a strong skills match. It is important to ensure you have a cultural match as well. For example, if you have a creative laid-back culture without a lot of structure, potential employees should be motivated self-starters who can operate well without a great deal of process. Applicants from a large company environment who are accustomed to detailed process and resources may struggle in an emerging organization that has yet to implement its process. In a start-up organization, it is important to find people that are flexible, thrive in a fast-paced environment and enjoy wearing multiple hats.

When making your next hire, we suggest you:

  • Evaluate your organizational culture and solicit feedback from your team. Keep in mind your perception may not always be the reality, so feedback is important.
  • Talk to your high performing employees. Determine traits they have in common and why they enjoy working for you.
  • Be clear on the skills and character traits needed for success in the position.
  • Identify what success will look like in the position a year from now and seek candidates who will meet be successful now and in the future.

We'd love to hear your stories of how ensuring you hire for fit has worked well for your organization!