Recent research tells us that a mid level manager on a salary of £42,000 can cost an organisation more than £132,000 due to the accumulative costs of being a bad hire. That’s quite staggering isn’t it?

This number isn’t fixed and clearly the cost of a bad hire can vary widely depending on the level of the position, the industry, and the specific circumstances of the hire, but it’s fair to say there is a lot of scope for wasted money when things go wrong with recruitment.

Here are some of the potential costs associated with a bad hire:

Recruitment and Onboarding Costs: You may have invested time and money in advertising the job, conducting interviews, and onboarding the new employee. These costs can be wasted if the hire doesn’t work out.
Lost Productivity: A bad hire may not perform well in their role, leading to lost productivity for the individual, the team and the line manager. Poor performance of one individual will impact the entire team’s output and may require other employees to pick up the slack.

Training Costs: When you hire a new team member there is always going to be a good chunk of time spent on training them to be effective in their role. This investment can vary widely depending on the role and the industry, but everything you’ve invested in training an employee will be lost if they don’t stay with the company for long, or if their performance doesn’t improve.

Managerial Time: Managers and supervisors may spend a significant amount of time dealing with performance issues, coaching, or addressing problems related to a bad hire and the cost of this can really stack up! The amount of time lost to underperforming employees can be huge, and could be better spent on either team members who are doing a good job, other more productive tasks.

Disruption to Team Morale: A bad hire will always negatively affect team morale, leading to decreased motivation and potentially driving other valuable employees to leave the organisation, which is why hiring decision need to be made extremely carefully.

Customer and Client Impact: If the bad hire has a customer-facing role, their poor performance can lead to customer dissatisfaction and even loss of business and that can lead to all kinds of issues.

Severance and Legal Costs: If you have to terminate a bad hire, you may incur costs related to severance packages or legal fees if there are disputes or issues related to the termination – this is a situation that employers want to try and avoid as the costs can really sky-rocket.

Recruitment Costs for a Replacement: If the bad hire needs to be replaced, you’ll incur additional recruitment costs, including advertising, interviewing, and onboarding the new employee, as well as those good old training costs once again.
Reputation Damage: Consistently making bad hires can harm your company’s reputation as an employer, making it more challenging to attract top talent in the future.

It’s important to note that the actual monetary cost can be challenging to quantify, but the impact on your organisation’s culture, team dynamics, and long-term success can be significant. Preventing bad hires through a thorough and effective recruitment process, including background checks, reference checks, and skills assessments, is essential for minimizing these costs.

And of course, if you’d like expert recruitment help, our recruitment team at The HR Consultants offer extremely competitive services (at just 15% of salary with no up-front commitment), so please get in touch for a no-obligation chat.