True Cost of a Bad Hire

Distracted employee working from home (true cost of a bad hire)

We all know that hiring competent and loyal talent drives productivity and innovation and adds to the growth of the business. But what happens on the flip side? Hiring the wrong person can have severe consequences that go beyond financial loss. 

This article will investigate the costs of hiring the wrong person.

Financial Loss

According to Career Builder, the minimum cost of a bad hire is 30% of their yearly salary. The average salary in Finance and IT is $81,359 in Toronto. That means the minimum cost is $24,407. This cost is coming from onboarding and wages paid.

Now consider this: if you hire an internal HR team to do the hiring, you have to factor in their salary, which is, on average, $51,236/per person, bringing the new total cost of a bad hire to $75,643. 

The worst part is that 74% of employers admit to hiring the wrong person. The good thing is that if this has happened to you, then you’re not alone. 

Impact on Team Morale

The wrong hire can harm team morale and job satisfaction. When coworkers witness subpar performance or laziness, it can lead to frustration and demotivation, affecting the overall work environment. Small business owners reported that a bad hire affected their business with less productivity, compromised quality of work, and lost time to recruit and train another worker. 

Employees not pulling their weight or dragging the team down can create a not-so-nice work environment. When you have to work with someone who’s not good at their job, it can lead to dissatisfaction. 

Reputational Loss 

According to Hubspot, 68% of consumers say they are willing to pay more for products and services from a brand that offers a good customer experience. Good customer experience is directly related to a positive brand image and reputation. In contrast, hiring the wrong person hurts the company’s or hiring manager’s image amongst clients and stakeholders, resulting in dissatisfied clients, negative reviews, and potential loss of business.  

Missed Opportunities   

Difficult employees, as pointed out by UnicornLabs, a Canadian leadership development team, can underperform and create friction within the group, posing challenges for effective management.  

Imagine a company hiring an employee who is underperforming. They will drag the team spirit down, leading to overlooking opportunities that could have been game-changers. These opportunities include partnerships, deals, or projects. When a subpar employee fails to seize these moments, the company misses out on potential growth, and the effects can ripple. If a company consistently fumbles due to poor hiring choices, it falls behind its peers.  

Does the Cycle of Poor Hiring Choices Have an End?  

study by Leadership IQ found something surprising. Half of the people hired for a job fail to do well within a year and a half. The main reason for these failures is something other than knowing the practical stuff. It’s more about not getting along with others. Many hiring managers even say they didn’t notice these interpersonal problems when interviewing the person for the job.  

How To Avoid Making Bad Hiring Decisions    

One solution is leveraging staffing agencies with the workforce solutions you need. For instance, at Talentoasis, we use a proprietary Talent Assessment powered by 86 years of research that dives deep into the candidate’s cognitive abilities, motivations and personality, with a 92% hiring success rate

What’s Our Cost

If you hire directly for a permanent position, the cost would be a fraction of what it would cost you to have an internal HR personnel, $51,236. If you choose to hire contract staff, it will be almost 100% free (learn more)


The cost of a bad hire goes beyond financial loss. It impacts reputation, company culture, and productivity. Avoid these problems by leveraging the right partners and tools, such as Talentoasis and their Talent Assessment.

Author: Dan. R

Raza. D

You miss 100% of the shots you don’t take – Wayne Gretzky

Director, Client Acquisition