How Much Does a Bad Hire Cost Your Business?

When a company makes a great hiring decision, it can boost productivity, morale, innovation and even the bottom line.

But what about the effects of a bad hire? If this is something that hiring personnel ignore, they may take a complacent attitude toward the candidate selection and interview processes.

Some might look at the issue of making a bad hire and say the situation is resolved simply by letting the person go and bringing in someone new. However, a flawed hiring process that results in many bad hires can cost a company significantly. Below is a short list of the ways a bad hire can cost your organization.

Higher Turnover

Every company needs good staff members. But there’s something which top employees can’t stand; having to work with bad employees or supervisors. Typically, great workers react to bad hires by simply quitting. Research has revealed that more than 80 percent of worker decisions to quit have been driven by a bad boss or poor relationships with co-workers.

Lower Morale

Worker morale is positively related with greater efficiency, company loyalty and greater profitability. Given this information, employers should take every step to avoid low morale.

One of the main driers of lower morale, it turns out, is adding poor-fit individuals to a team. In a survey by Robert Half, business executives said bad hires adversely impacted morale as much as 95 percent of the time.

Brand Damage

In many situations, a bad hire can damage a company’s brand, typically in one or two ways. First, the adverse influence on morale and elevated turnover will become noticed by those in the marketplace who have regular dealings with the company. Once a company gets a reputation for hiring bad people, the company will have even more issues hiring top talent which will perpetuate a cycle of bad hiring decisions.

Second, a bad hire who has a customer-facing role can have a direct negative impact on a company’s brand throughout the course of their daily job. When a bad hire is disrespectful, rude or even hostile to customers, it likely lowers the odds of repeat business from these customers. Affected customers are also less likely to recommend the company to others.

Inflated Hiring Expenses

While it may be hard to quantify the dollar value on low morale or brand damage, there are some very quantifiable financial costs of a bad hire.

A CareerBuilder survey found the average cost of a bad hire for an entry or mid-level position is between $7,000 to $10,000, with costs varying based on the position. The survey also found the cost of a bad manager to be around $40,000 or more.

We Can Help Your Company Avoid Bad Hires

At Superior Resource Group, we work intently with our clients to make the best talent acquisition decisions possible. Please contact us today to find out how we can help your company do the same.


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