How Much Does One Wrong Hire Cost Your Organization?

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Hiring mistakes are costly! Probably costlier than you can imagine. Bad hires reflect negatively on those involved in the hiring decision and adversely impact corporate culture and finances. One bad hire can cause productivity to drop throughout an entire company. 

There are considerable costs tied to each bad hire. These include:

1. Incentives, Benefits, and Health Care Costs

The departure of a senior executive often results in the payment of severance. Companies also lose money spent on employee benefits, bonuses, training and executive coaching and outplacement services.

2. Replacement Costs

Replacing an employee takes a lot of time. It takes time to advertise, recruit, interview, and hire an employee. A CBS News article recently listed the cost of replacing an executive-level employee as being, on average, 213 percent of the annual salary for the position.

3. Time and Training Costs

Training a new employee takes time away from other employees. It also may require sending the new hire to a third-party training or conferences to fully immerse them in the business. It may take 90 days or more for the new employee to be fully integrated into their new position.

4. Lower Cost of Productivity

One bad hire can cause productivity to drop throughout the company as other employees are forced to pick up the slack. It also can hurt morale and thus the overall corporate culture — further impacting productivity. Thirty-nine percent of respondents in one survey conducted by CareerBuilder reported that bad hires cause productivity to fall. Thirty-three percent of respondents said that morale was negatively affected by bad hires.


Learn more about the impact a wrong hire has on your company by downloading this whitepaper.

Ralph Dise

Ralph Dise is founder and president of Dise & Company. Ralph has a life-long interest in developing leaders and helping enterprises succeed. He learned his earliest leadership lessons as a teenager attending a summer military program.

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