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Grow Your Business Your Team

Dollars and Sense: The Cost of a Bad Hire

Dollars and Sense: The Cost of a Bad Hire
Credit: Efetova Ana/Shutterstock

Making a bad hire can have a major impact on your company's bottom line, new research finds.

From the time and resources invested in the hiring process to lost productivity and lower company morale, bringing on the wrong person costs businesses thousands of dollars, according to a study from CareerBuilder.

The research shows that the costs vary by company size:

  • 500 or fewer employees: $11,000
  • 500 to 999 employees: $22,000
  • More than 1,000 employees: $24,000

"If an employee isn't well suited for the job or has a bad attitude, the time they spend not working could significantly impact your bottom line," Ben Goldberg, CEO of Aurico, a CareerBuilder company, said in a statement. "It's a hard cost to quantify, but it adds up when you consider the loss of employee morale, the additional supervision that employee needs, productivity loss for the organization, revenue that's not being generated and client relationships that could be turning sour as a result of bad impressions."

Most businesses, however, have made this mistake: 75 percent of the hiring managers and human resources managers surveyed have hired the wrong person for a job at one time or another. [See Related Story: Welcome Aboard! How to Get New Hires Off to a Good Start]

Of those who have done so in the past year, 36 percent said it hurt their company's productivity, 33 percent said it compromised the quality of the organization's work and 31 percent said it negatively affected employee morale. Other common ways employers said making a mistake in the hiring process affected their businesses were that they lost time while recruiting and training another worker, and that the employee's managers and co-workers had to waste time assisting the bad hire.

A variety of behavioral and performance-related issues can contribute to someone being considered a bad hire. Those surveyed classify a poor hire as someone who exhibits one or more of the following traits:

  1. Didn't produce the proper quality of work.
  2. Had a negative attitude.
  3. Didn't work well with other employees.
  4. Had skills that didn't match what they claimed to be able to do when they were hired.
  5. Had immediate attendance problems.
  6. Received complaints from customers.

The research shows that it doesn't take long for most businesses to realize when an employee isn't the right fit.  Twenty percent of those surveyed said they know within the first week of hiring a candidate whether they made a mistake, and 53 percent said they know within the first three weeks.

The study was based on surveys of 2,379 U.S.-based hiring and human resources managers.

Chad Brooks

Chad Brooks is a Chicago-based freelance writer who has nearly 15 years experience in the media business. A graduate of Indiana University, he spent nearly a decade as a staff reporter for the Daily Herald in suburban Chicago, covering a wide array of topics including, local and state government, crime, the legal system and education. Following his years at the newspaper Chad worked in public relations, helping promote small businesses throughout the U.S. Follow him on Twitter.