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The Cost of a “Bad Hire”

By hire-up in Industry Resources

Lauren Milam

Regional Vice President – West coast

Hire Up Staffing & Healthcare


November 16, 2021

How to Navigate Common Pitfalls

You may be seeing the headlines about it and/or experiencing the impact of the 2021 Great Resignation. While companies are working to regain a stronger sense of balance within an otherwise imbalanced candidate market, leaders are feeling the pressure to hire and an uneasiness in doing so. This makes sense because the potential negative implications of a poor hiring decision are far-reaching even in the best of candidate markets. Yet, add in these current circumstances and it is important to give pause.

When evaluating the true costs of our hiring decisions, there are things to consider. I have identified several key components, along with ideas for how to best avoid pitfalls when possible or navigate through them when necessary.

1. Financial: Most obvious of all “costs” include financial considerations. The number of hours spent reviewing resumes, scheduling, and conducting interviews is just the beginning. Consider also the costs associated with advertising the position and the hourly rate associated with the person supporting your recruiting efforts.

Then once hired, the costs of the onboarding process add up and include the number of training hours required of them, the team needed to train them, and any equipment needed for their new role.

According to the US Department of Labor, the price of a bad hire is at least 30% of the employee’s first-year earnings.

Pro Tip: Be thoughtful with your compensation. Staying competitive is important, however, avoid “buying” your new employees for the sake of “winning” their acceptance of your job offer. Overpaying new employees to get them in the door will not always afford you the most enthusiastic and high performer, but potentially someone just looking for dollar signs. It is difficult to sustain performance if the employee is not truly in the position because they want to be there for anything more than the money. Hire for passion and use compensation as a tool, not a trump card to ensure a candidate picks you over another employer.

Pro Tip II: Be clear with your expectations early. Painting a clear picture of the position is an especially important part of ensuring you are not being hasty with your hiring efforts. Desperation can create poor outcomes, on both sides. Your clear explanation of the role and checking for their understanding of the position is key to setting your new employee up for success. Remember: Unclear is unkind.

2. Morale and Culture: A poor hiring decision can negatively impact your organization’s culture and leave the most resolute of employees questioning their loyalty and your leadership decisions. As a hiring decision-maker, you are an important gatekeeper of culture. It is imperative that you carefully consider how a potential candidate will integrate with your established team.

One bad apple can ruin the bunch, as they say. Whether the trouble starts with a new and negative Nellie or a newbie who is not as interested in meeting the expectations of the position, your ability to identify red flags early and respond accordingly will be paramount to preserving a positive workplace culture. Disengagement is born from feelings of being misled or unappreciated. If a new employee is not meeting expectations, your team already knows. Show them you care about preserving their workplace culture.

Pro Tip: Stay engaged beyond the hiring process. Be sure your new hire understands performance expectations. Create milestones and schedule performance check-ins. Have difficult conversations early, if needed. Coach to correct behaviors immediately. Show genuine efforts with the new hire; rally around them, support them. Ensure you are being direct and fair in your communications and expectations with everyone.

And, if necessary, and when timing is appropriate, be open to righting a wrong fit. You show through your actions that your team is important to you. They are watching for this. Remain committed to maintaining a positive workplace culture by staying nimble and not tied to a hiring decision solely to safe face or money. (It will not do either overall.)

3. Reputation: In addition to the negative impact a poor hiring decision can have on morale, a similar risk comes into play with customers. When considering fit, remember to also consider the risk associated with a new employee working closely with your valued clients. A poor hiring decision could not only tarnish relationships with current customers, but they could turn off new and potential customers as well. The financial risk associated with reputation is hard to quantify, however, placing an employee in front of your customers is a particularly crucial decision that has long-lasting consequences.

Pro Tip: All candidates are potential employees and/or customers. They have ties to the area in which you operate. Remember to be respectful and honest in your interactions. If a candidate does not appear to be the right fit for your needs, be clear with them and keep your promises when it comes to getting back in touch. How you manage your interactions with them reflects how you serve your customers.

We are in the people business and if there is one thing that is consistent, it is that people are multi-dimensional beings with complex characteristics. There is no full-proof guide to ensuring THE perfect hiring decision every time. However, the tips above will help you to be thoughtful with these decisions. “Going with your gut,” is advice we all have heard over the years. As a hiring professional, I agree that we use our gut instincts in our favor by identifying potential areas of concern. Pay attention to the red flags and do not be afraid to ask more questions around those areas where you feel performance may be an issue.

Closing Pro Tip: We are all human. We may find that a hiring decision did not work out as we had anticipated. Valuable lessons lie in honest reflection. Work with another manager and talk things through. Collaborate and identify areas of the process to manage differently with the next hiring decision. Walk through all components of the current new hire equation and assess which areas to enhance, making for a better experience for all involved.

Be open to learning from your missteps. Not only does this quality make you a better leader but your team is watching and looking for ways to confirm that they are in the right place with a leader they can respect. A leader who learns from their mistakes can be the model for change and innovation in the workplace. It starts with you. The cost of a bad hire may have its price, but the value of a leader who is human enough to allow room for their own vulnerability is priceless.

Care for some support during this unusual candidate market? Let us help!

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There is no doubt that 2021 will bring forth opportunities with which to leverage new and emerging employment trends. Follow the Hire Up Staffing & Healthcare Services Blog to stay connected with a variety of topics aimed to help support you! Whether you are an active job seeker looking for tips and tricks to land your perfect job or an employer looking to fill a challenging position, we are here to help you HIRE UP!https://www.forbes.com/sites/falonfatemi/2016/09/28/the-true-cost-of-a-bad-hire-its-more-than-you-think/?sh=7d36b3074aa4


Lauren Milam, Regional Vice President – West-Coast | November 16, 2021

As the Regional Vice President of the West Coast operations, Lauren focuses on the development of each Hire Up team member and office to ensure they have the tools and ability to meet the needs of all the clients and candidates. Lauren’s vast experience in the staffing industry and her passion for people, results, and success is what drives her daily. This experience includes leadership, management, employee development, sales, marketing, recruitment, client retention, and candidate retention.  Her goal is to ensure every client and candidate receives excellent service through every aspect of the process. Lauren would love to speak with you so she can help your business reach new heights.

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