How Much Does A Bad Hire Really Cost?

All recruiters and HR managers strive to recruit the best candidates. A great hire can improve productivity, boost office morale, and positively impact the company’s bottom line. There are so many upsides of hiring a good candidate.

But… what about the flip side? What are the risks of making a bad hire? This is a question recruiters sometimes might not bother to ask. As a result, they may approach the hiring process with complacency and end up making the wrong hire.

What is a Bad Hire?

A bad hire could be a nightmare.

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How does this come about? Well, in diplomatic terms, misrepresentation. In more blunt terms, lying. Candidates can lie in their resumes and applications. This can range from exaggerating educational or work experience to blatantly lying.

A Human Resources Social Network study found that 50% of candidates misrepresent, and 30% tell blatant lies in their resumes.

Misrepresentation is a way how recruiters end up making bad hires. It is not that you go and deliberately hire the worst candidate.

Costs of a Bad Hire

What is so bad about hiring the wrong candidate? After all, as soon as you realize you’ve made a bad hire, you simply fire them and hire someone else. So, what’s the big deal? Actually a lot.

Here’s a snapshot of the downsides of making a bad hire:

Increased Turnover

Every organization needs great employees. But there’s one thing which good employees can’t stand – that is having bad employees as their colleagues or managers. So how do great employees react to bad hires? Well, they simply quit.

Studies have shown that over 80% of employee decisions to quit have been directly caused by other employees.

Dampened Morale

Employee morale is positively correlated with increased productivity, organization loyalty, and higher profitability. And what is the one thing which kills workplace morale? The answer is simple: adding the wrong individuals to the workplace.

In a Robert Half survey cited by the Entrepreneur Magazine, company executives reported that bad hires negatively impacted workplace morale up to 95 percent of the time.

Decreased Teamwork

Teamwork is critical towards organizational success. Its because most tasks involve employees cooperating with their fellow co-workers. For instance, a

Career Builder study quoted 60% of employers reporting that bad hires could not work well with their fellow employees.

The reason is that bad hires often do not fit within the organizational culture or environment. Other employees find it difficult to cooperate with them. The negative impact on teamwork is even worse when the person in question is a team leader or manager.