The True Cost of a Bad Hire

When a hire doesn't work out, the costs are staggering—and most companies dramatically underestimate them. According to the U.S. Department of Labor, a bad hire can cost up to 30% of the employee's first-year earnings. But that's just the beginning.

Let's break down what a bad hire actually costs for a $60,000/year position:

Direct Costs

• Recruiting costs: $5,000 - $15,000
• Training and onboarding: $3,000 - $10,000
• Salary during ramp-up: $15,000 - $20,000
• Severance (if applicable): $5,000 - $15,000

Subtotal: $28,000 - $60,000

Indirect Costs

• Lost productivity from team: $10,000 - $30,000
• Management time: $5,000 - $15,000
• Customer relationships: Incalculable
• Team morale impact: Incalculable

Total potential cost: $50,000 - $150,000+

Resume Worship

Resumes tell you what someone did, not how well they did it or whether they'll succeed in your environment. Studies show resumes are poor predictors of job performance.

Unstructured Interviews

When interviewers "go with their gut," they're really just assessing whether the candidate is similar to them. This leads to:

• Homogeneous teams
• Bias against non-traditional candidates
• Poor prediction of actual performance

Ignoring Culture Fit

Technical skills can be taught. Attitude and work style cannot. Yet most hiring processes over-index on hard skills.

1. Define Success Clearly

Before posting a job, answer:

• What does success look like in 6 months?
• What are the 3-5 key outcomes this person must deliver?
• What behaviors and traits predict success in this role at our company?

2. Use Structured Interviews

Ask every candidate the same questions. Score responses on a consistent rubric. This simple change dramatically improves hiring accuracy.

3. Test Real Work

The best predictor of job performance is job performance. Consider:

• Paid trial projects
• Work sample tests
• Realistic job previews

4. Check References Properly

Don't just confirm dates of employment. Ask:

• "Would you rehire this person?"
• "What would I need to do to get the best out of them?"
• "Where did they struggle?"

5. Add Video to Your Process

Video introductions reveal communication skills, enthusiasm, and personality in ways resumes never can. You can assess:

• How they explain complex ideas
• Their energy and presence
• Cultural fit indicators

During the Interview Process

• Badmouthing previous employers
• Vague answers about achievements
• Inability to explain why they want this specific role
• Inconsistencies between resume and conversation

Reference Red Flags

• Former managers who only confirm dates
• Long pauses before answering
• Carefully neutral language
• "I'd rather not say"

The best companies don't just avoid bad hires—they systematically select for great ones.

Hire Slow

Rushing leads to mistakes. Build a hiring process that takes adequate time for assessment. The cost of an open position is almost always less than the cost of a bad hire.

Involve the Team

The people who will work with the new hire should have input. They often catch red flags that hiring managers miss.

Trust But Verify

Reference checks, background checks, and skill assessments aren't bureaucratic overhead—they're insurance policies.

Despite best efforts, some hires don't work out. The key is recognizing this quickly:

• 30 days: If there are serious concerns, address them directly
• 60 days: If improvement isn't happening, start documentation
• 90 days: Make the call—don't let a bad hire linger

The cost of keeping a bad hire is always higher than the cost of starting over.

Reduce your hiring risk with RealHires. Our video-first approach lets you assess communication skills and cultural fit before committing to interviews. See candidates as they really are.