Hiring Costs More Than Money

Hiring new employees can be exciting. It points to a business growth, an opportunity for change and a chance to improve the division of labor and job responsibilities.

It is also both high cost and high risk. This is not a good combination. The cost of a bad hire is much more than the salary paid, and it is important to be aware of what goes into a hiring decision.


A bad hire removes financial resources from multiple parts of the business into, ultimately, waste.

There are, of course, the wages paid to that person during their tenure with you. There are also recruitment costs given either to a staffing company, job boards or other channels.

Think about how many people in your business are involved in each hire: who is writing and vetting the job spec, selecting good applicants, arranging interviews and follow ups, conducting interviews, participating in decision-making meetings, and possibly more.

Tally up all those people’s salaries for the time they spent on the hire. Now you are looking at the first financial cost of a bad hire.


Considering all those people and their donated hours: what would they have been doing with their time otherwise?

The productivity time lost means that there were actual business tasks and to dos that have not yet been done. These may be client-facing, may be internal, but all in some way would bring to revenue generation – even if indirectly – so the time, work and associated revenues lost are additional costs of a bad hire.


Every bad hire harms your team and company culture.

Your employees may spend three months working alongside somebody with a weaker work ethic or wrong attitude, making them resentful that such a person could be hired to begin with. An atmosphere of negativity risks seeping into your office environment.

Which, ironically, can be exacerbated with the eventual firing of said employee. The rest of the team may or may not be surprised by the decision, but no firing is performed without some feelings of anxiety and awkwardness by everybody in the room. Beware the lasting effect of a bad hire on your company culture and mood.

Get it right the first time

Your HR team, or recruiters, are only as good as the instructions you give them.

Over the next few weeks, turn to these pages for an ongoing series on how to hire well; including some current best practices with their upsides and limitations, as well as ideas for you to craft the perfect job spec and hire your best people every time.

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