The Massive Costs of a Bad Hire

Many managers would rather hire a mediocre job candidate than leave a vacant position open but it turns out that a bad hire is usually far more harmful than letting the vacancy remain until you can find a great hire.

When a manager is responsible for a bad hire, they often find it hard to recognise, let alone accept, because they feel the employee is a reflection of their discernment and capability as a manager.

Every manager roots for the people they hire because their success (or lack thereof) in the workplace is often taken as an informal indicator of the manager’s leadership abilities. This is why they usually overlook the red flags of the bad hire’s poor performance and explain it away if someone mentions it.

A 2016 study by recruitment specialist Robert Half found that poor hiring decisions are responsible for 10% of employee turnover in Australia with almost two thirds (65%) of Australian HR managers admitting they have hired an employee who did not meet expectations.

Below we explore the various costs of a bad hire:

Lowers productivity levels

If an employee doesn’t have the necessary skills for the job or has a bad attitude towards their work, then they are likely not to be generating enough revenue to even cover their salary. A bad hire costs you money by not being able to perform the job you hired them for despite still getting paid for it.

Furthermore, if other team members significantly and consistently rely on the bad hire for part of their respective jobs, the effects of their under-performance on productivity are multiplied. Your entire work process slows down (maybe even grinding to a halt), inevitably costing you lost revenue the whole time.

Lowers team morale

A bad hire with a bad attitude and poor performance forces the rest of the team to pick up their slack. They constantly have to watch out for the bad hire’s mistakes and correct them on time as well as stomach their annoying habits in the workplace and this naturally has a crushing effect on morale.

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Frustration soon rises as the other employees grow angrier with having to clean up after someone else, conflicts become more common as team members toss the extra work and responsibilities around and sooner or later, the best talent slowly starts resigning as they start feeling too distracted to focus.

Affects customer service

Poor customer service is one of the costs of a bad hire. Bad hires are bad news for customer service because they are usually unable to understand the full scope of their job responsibilities, and when they do, are always trying to do the bare minimum.

This all makes for bad customer experiences which can easily ruin your business brand and credibility, especially in today’s digital age of viral social media posts.

Remember that the cost of reeling in a new customer is way higher the cost of keeping an existing one and yet one bad experience with a bad hire is enough to make a long existing customer never return.

And if clients are always interacting with a new face because you’re always making bad hires for that position and having to fire them, they can easily (and rightly so) assume your business lacks stability.

Monopolises manager attention

Overworked, frustrated and distracted managers are another of the significant costs of a bad hire. A bad hire not only forces the rest of the team to pick up their slack, but also hogs the time and attention of the manager, often making them resort to micromanaging just to get the bare minimum.

Keep in mind that trying to get a bad hire to deliver on even the simplest work assignment is often a huge headache as they will often manifest a new bad habit (such as not replying emails promptly) as soon as the manager toils through getting them to drop an old one (such as showing up late to work).

The manager gets sucked into a series of corrections to make, complaints to consider and disciplinary actions to enforce instead of helping other employees perform better on their jobs and focus on higher-level strategic tasks such as creating, assessing and refining goals for the team members to achieve.

costs of a bad hire

Image: Unsplash

More bad hires

The costs of a bad hire become even higher when they have been hired to occupy a leadership position in your company. And the scary part is that this is something that happens very often – in fact, a Gallup study found that organisations fail to make the right choice of manager an astonishing 82% of the time.

Underperforming managers cause even more devastating effects than non-leadership bad hires because in their official capacity they can make more bad hires and allow more underperformers to infiltrate the company. If rooting out an individual bad hire is hard, dealing with a whole team of them is a nightmare.

Trigger mass exodus

Related to a couple of the previous points, bad hires in managerial positions don’t just lower morale and hire more bad hires but also often trigger a string of resignations in whatever team they have been appointed to lead.

The Gallup study above also found that half of all employees have ever quit their job because of developing irreconcilable differences with a manager/supervisor in the workplace.

People notice when you have a bad hire in a leadership role and the longer you take to remove them, the more faith the employees lose in the organisation as whole and this is how they start seeking better opportunities elsewhere.

Unfortunately, companies are often reluctant to let go of bad hires, especially those recruited for managerial positions, because they don’t want to seem unsure of such key choices.

In Summary

Bad hires come with costs, some of which can be quantified and others that can’t be measured and are yet still just as real. One bad hire can disintegrate a whole team, destroy a manager’s career, or even collapse the entire organisation, especially if they are in a leadership role.

This is why every manager should make sure to weed them out in the hiring process and handle them quickly if they slip through.

Gerald Ainomugisha

Gerald Ainomugisha

Gerald is a freelance writer with a pen that is keen for entrepreneurship, business and technology. When he isn't writing insightful articles on employee engagement and corporate culture, Gerald can be found writing for a number of media outlets.