Anatomy (and Costs) of a Bad Hire

A new survey conducted among over 2,200 full-time hiring managers and HR professionals discloses the multitude of reasons why employers make bad hires.

Source: Jrcasas / iStock / Getty

The CareerBuilder survey revealed that hiring the wrong person is a widespread problem, with 74% of employers saying they’ve done it—and companies lost an average of $14,900 per bad hire made in the past year.

So what factors into the decision to make a bad hire?  And how do employers know they’ve made a mistake?

The most cited reason for making a bad hire, cited by 35% of respondents, was that the candidate didn’t have all the needed skills for the position, but the hiring manager thought they could learn quickly.  Other common factors: The candidate lied about his or her qualifications (33%), the hiring manager “took a chance on a nice person” (32%), and that there was pressure to fill the role quickly (30%).

Interestingly, 29% blamed having a hard time finding qualified candidates for at least part of the reason why they made a bad hire while the same percentage “focused on skills and not attitude.”  These findings underscore that either a lack of skills or a poor fit in terms of attitude can make someone a bad hire—and which makes a perfect segue to how survey respondents recognized they’d made they’d picked the wrong person for the job.

Here, 54% cited a worker’s failure to produce the proper quality of work as what categorized them as a bad hire, followed closely by a worker’s “negative attitude” (53%).  A worker who didn’t work well with other workers (also an indicator of attitude) was identified by 50%, and 45% knew they had a bad hire when it became clear that the worker’s skills did not match what they claimed to be able to do when they were hired (which ties back to managers’ belief that bad hires lied about qualifications).  Interestingly, 46% of respondents recognized they’d made a bad hire, at least in part, when the worker had immediate attendance problems (surely a yellow flag for any hiring manager!).

“It’s important to note that there’s a ripple affect with bad hires. Disengagement is contagious — poor performers lower the bar for other workers on their teams, and their bad habits spread throughout the organization,” said Rosemary Haefner, chief human resources officer at CareerBuilder, in a press release. “The best thing hiring managers can do is put in the time and effort on the front end to make sure they have the best available pool of applicants for every job opening. And, just as importantly, have good procedures in place for evaluating candidates.”

Bad Hire Costs: High.   Losing Good Worker Costs? Higher.

Employers reported that the impact of bad hires was lower productivity (37%), lower quality of work (31%) and the time to recruit and train a replacement (32%)—all contributing to the nearly $15,000 price tag cited above of making a bad hire.

However, CareerBuilder found that there’s a much costlier mistake than making a bad hire—it’s losing a good one.  Employers reported that the the average cost of losing a good hire was $29,600 over the past year—nearly twice the cost of a bad hire.  And the results seem to indicate that the best recourse for employers that don’t want to lose their good hires/workers is to show them some appreciation:  75% of 3,700 full-time workers surveyed said their loyal to their employer, but only 54% believe their company is loyal to them. Perhaps that’s why 31% report they are likely to change jobs in the coming year.

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