The cost of a bad hire

When it comes to hiring staff, employers are at risk of making one of the costliest mistakes in business – a bad hire.

In a survey conducted by CareerBuilder it was revealed that, out of 6,000 hiring professionals worldwide, more than half said they had felt the effects of hiring someone who turned out to be a poor fit for the job or who did not perform it well.

Particularly for small companies, investment in the wrong person is a threat to the business. But even larger, established companies can’t afford the high price of poor performers.

CareerBuilder CEO, Matt Ferguson, explained that “when you add up missed sales opportunities, strained client and employee relations, potential legal issues, and resources to hire and train candidates, the cost (of replacing a bad hire) can be considerable”.

According to a review carried out by Oxford Economics in 2014, it can cost over £30k to replace a staff member.

The logistical cost of replacing an employee includes expenses such as advertising costs and agency fees, as well as staff time lost to interviewing prospective candidates.

In 2012, research by Bersin & Associates (now Bersin by Deloitte) showed that the average UK spend per hire was £5,331. This is supported by Oxford Economics, whose study suggested that the logistical cost of recruitment was £5,443.

However, the major cost implication for firms replacing staff is lost productivity.

When employing a new member of staff the company accepts that, while the new employee may hit the ground running, there will be a period of ‘getting up-to-speed’ where the new employee is not working to full potential.

A certain level of supervision is also expected in the early days; whether a manager takes on this responsibility or leaves it to another team member, someone’s time is sacrificed in order to help the new team member settle in.

This period of time is one of the biggest hidden costs of the whole recruitment process.

Whilst it is difficult to attach a figure to this period of time, it has been suggested that lost productivity could cost upwards of £25,000.

The average worker supposedly takes 28 weeks to reach optimum productivity which, according to Oxford Economics, has an attached cost of £25,181 per employee.

Add that to the lost resources of tenured staff members supervising the new hire, and you have the dominant cost factor for replacing a departing employee.

A bad hire not only loses money, but can leave also leave your company with multiple problems.

Hiring the wrong employee can affect employee morale.

The more time spent focusing on the negative consequences of making the wrong hire, the more disengaged or dissatisfied the remaining team become.

When you have to spend so much time on one member of the team or you have a person who is bringing everyone down, it’s hard to keep employees upbeat.

When a disengaged hire doesn’t pull their weight, good employees must work harder to make up for it.

Poor performers lower the bar for other employees, and disengagement spreads.

Even after removing the bad employee from the equation, companies may still have to invest time and resources into resetting the behaviors of remaining team members.

Making the wrong hire could also hurt your reputation, which could make it more difficult to pull in top talent in the future.

A bad hire, and the following fallout, could create a bad experience for other employees.

In today’s digital world, job seekers are connected to information 24/7 and can easily see what is and isn’t working at a company.

If your employees are unhappy, it could end up hurting the reputation of your company.

A bad hire can be costly, costing you in productivity, company finances, employee morale, and company reputation. Instead of losing time and money, it’s better to make sure that you’re recruiting the right employees in the first place.

Finding, recruiting and retaining the right talent into your organisation presents many challenges but is critical to success. Make sure you invest wisely in the right recruitment approach.

Orthoexecutive are an executive search organisation who partner exclusively with the orthopaedic and spine industry.

Specialising predominantly in senior management positions, with particular expertise in recruiting into Sales and Marketing functions, Orthoexecutive have a proven track record in placing candidates in the UK, EU and Asia-Pacific.

If you are an organisation looking to partner with an executive search firm for your next strategic hire, get in touch with Matt Woods (07500) 555508 or Fiona Walters (07585) 003433 to find out how we can help your business find the senior talent you need.

To find out more about Orthoexecutive, please visit our website.

If you’re interested in a career change, view our most recent opportunities.


It costs 30k to replace a staff member, available via HR Review

The True Cost of a Bar Hire – It’s More Than You Think, available via Forbes

What is the cost of making a bad hire? Available via Agency Central



Profile photo of Georgina Dawson
Marketing Manager at OrthoConnections, OrthoExecutive and OrthoForex.
Digital marketing expert with over 5 years’ digital media experience.


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