How Much are Hiring Mistakes Costing Your Company?

How Much are Hiring Mistakes Costing Your Company?

by Marketing Team | July 7, 2017

0 Hiring Strategies and Tactics get connected

cost-of-bad-hireAnd What are They Costing You?

Hiring is one of those business processes that many people believe, rightly or wrongly, that they know what they’re doing.  Many hiring managers form opinions quickly about what candidates are the right hires, and what candidates are not…and act on those decisions with confidence.  Unfortunately, a lot of those decisions  don’t work out as planned.  Hiring mistakes are both common and costly.

How do you know you’ve made a hiring mistake?  

A “bad hire” is not just someone who can’t or won’t do the job.  There are other signs of a “bad hire” that can come up in your new employee’s  first 1-6 months of employment that suggest you’ve missed the boat.

  • The employee’s behavior is slightly sub par – not enough for you to fire them, but issues with performance that start to impact the team.  Lost efficiencies are typically the first signs, with team morale or motivation not far behind.   “Joan is just not doing the job we need her to do, and its frustrating the team.”
  • The employee seems to be trying hard, but makes simple, often hidden, mistakes – in some cases resulting in a lost customer or lost revenues before you even know they are occurring.
  • The employee is doing their job, but you’re not seeing any enthusiasm or passion for what they are able to contribute. You consider them sort of “ho hum” which is okay, but you don’t want that attitude to spread.
  • They clearly aren’t providing opportunities to add value or to make a difference. Again, they are doing everything on their checklist – but never go beyond to suggest an improvement, or support others with a team goal.
  • They take more, not less of your time to help them perform at the levels needed. You find yourself retraining or restating your expectations because they just don’t connect the dots like you  need them to do.

And you’re not alone if you see these signs with a recent hire.   In a recent CareerBuilder survey, 75% of the hiring managers surveyed admitted they had hired the wrong employee in the last year. 

The costs to you and your company for hiring mistakes are likely to be much more than you think.

Consider the following:

  • The cost of re-recruiting and training (10-20K a pop for some positions).
  • Lost personal, even team, productivity (it can become very noticeable in 1-2 months).
  • Errors in work product. Hopefully errors you find before the customer does.
  • And what’s the cost to your company if you lose a customer? Or worse, multiple customers?
  • Management Time – yours? Others?
  • Employee turnover and morale

The Department of Labor makes the claim that employers waste about 30% of the employee’s annual pay if they have to be replaced.  That’s a pretty staggering cost given that  80% of first year turnover is created by bad hires.

What is the toll on you – the manager responsible for a team’s performance?

If you are trying to find “work-life balance”, its pretty obvious that making the right hiring decisions is key to achieving your personal goals.   Managers who learn how to hire employees, who can be developed and retained, are managers well on the path to leadership success.

Avoiding Hiring Mistakes.   

There are several steps  you can build into your hiring process to make sure you “hire right”:

  1. Make sure your candidates are coming from a variety of sources…not just the one or two job boards that are either free or offering “short term” discounts.  This is where a professional recruiting organization always makes a difference.  Recruiters who are in the marketplace source candidates 24/7, using multiple venues, job boards, and candidate communities.  They know the market over the long haul, and the few candidates they put in front of you are selected from large databases of potential candidates.


  1. Focus your time on those parts of the hiring process that deliver the highest impact results.  One of the key benefits of using a staffing agency to help you hire is that you avoid all the laborious and repetitive steps in the hiring process, like sourcing and pre screening.  This gives you the time to focus on a handful of activities that only you can do – evaluating a short list of qualified candidates to assess their fit with your team.  Staffing agencies do all the time consuming sourcing and pre screening work for you so that your time is spent carefully considering  the  “best of the best”.  Many bad hiring decisions happen when Hiring Managers get tired and just  “want it to end”


  1. Make sure you spend the time to “get the interview right”. Prepare your questions in advance, and make sure your set of questions will elicit all the information you need to make a good decision about who to hire.  If you want to hire someone who is good at problem solving, make sure you find out how they have done that in their last job.  If you have 16 traits that you want to make sure the candidate you hire has, make sure there is at least one question that will elicit information for each trait.


And don’t forget to ask all candidates the same interview questions, regardless of how perfect you think they are for the job.  Getting the candidates answers to the same questions makes it easy to compare and contrast each candidate.


  1. Make time your friend, not your enemy.   Your hiring process needs to be fast and efficient, but it can’t be done so quickly that you short-cut important steps.   Its always a good idea to let your recruiter know weeks in advance that you will have an upcoming need so that they can pipeline potential candidates for you.   As we like to say at PACE – sometimes you have to slow down, in order to go fast.

These are just a handful of things you can do right now to minimize the time and expense of a hiring error.  We’d love to share some of the hiring tools and resources we’ve created to help our client’s hire right.

  • If you’d like some ideas on interview questions that can help you uncover candidates who will “fit”, request a copy of our Interviewing Guide, one of the more popular additions to our Smart Hiring series. It comes in hard copy or an electronic version.
  • And if you’d like a great summary of best practices for the entire hiring process, from point of need to onboarding, request our Hiring Eagles ebook.


Nancy Swanson MarschallThis article was written by Nancy Swanson, PACE’s Vice President of Partner Services and Solutions.  She and her team work up close and personally with each employer, making sure that when it comes to finding, hiring, and retaining talent, you always have the competitive edge.

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