Cost of Bad Hiring

Cost of a Bad Hiring

Impact of bad hiring.

Every hire or recruitment has inherent costs. However, the costs are not merely confined to money as a lot of time and effort are also invested in the hiring process. According to the US Labour Department, bad hiring costs 30 per cent of an employee’s first-year earnings. However, things may be slightly different in the Indian context.

A fairly big company can absorb the costs of bad hiring to some extent. But plenty of instances have destroyed small companies. Generally, a new recruit in the current context comes from a recruitment agency which entails a charge. During the training period, it is given that the new recruit will not contribute significantly to the employer’s bottom line.

Additionally, the trainers, who are usually senior employees, spend a lot of time teaching the ropes to the new entrant. Moreover, if the cost of relocating the recruit is taken into consideration then costs shoot higher.

Although people generally speak of the financial loss of a bad hiring a closer look will reveal that moral and productivity costs are sometimes higher. A bad recruit has a ripple effect. If one employee is a bad performer, other team members have to make it up for him. This process invariably hurts the overall productivity of an organization.

Besides productivity, a bad apple also damages the morale of his peers and colleagues. A poor performer may lead to an exodus of skilled performers. Moreover, the negative impact of a bad hire remains long after the employee leaves the company. This is so as team members get tuned into their manager’s system of doing things. Generally, it takes a lot of money and time to get things back to the old order.


If one has to sum up the cost of bad hiring, he/she can safely say that though the financial cost may be apparent other costs are far higher. A poor performer can be a huge disruptive force which can shake the very foundation of a mid-size company. Even a big firm may find it difficult to recoup the losses incurred due to bad hiring. So, we have to be careful with the process, and for functional reasons we can also hire recruitment agencies.

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