The True Cost of a Bad Hire

This post was originally published on April 29, 2014, and updated on February 12, 2025.

The True Cost of a Bad Hire Summary:

• The High Price of a Bad Hire: Bad hires can be expensive, leading to wasted recruitment and training costs, as well as potential severance costs or legal fees upon termination.
• Disruption to Productivity & Morale: Poor hiring decisions disrupt team productivity, morale, and cause high turnover, which affects workflow and employee engagement.
• Damage to Client Relationships & Reputation: A bad hire, particularly in client-facing roles, damages relationships, harms brand reputation, and makes it harder to attract top talent in the future.

Hiring managers and HR professionals continue to face pressure to find and place top marketing and creative talent. With ever-evolving job roles, emerging skill sets, and an increasingly competitive hiring landscape, making the right hiring decision has never been more crucial. One wrong decision is not just a hiccup, and it can cost a company thousands in lost productivity, training, and recruitment expenses.

The Cost of Recruiting Effectively

The hiring process today requires significant investment. It is no longer as straight forward as job seekers applying to open positions they see and recruiters finding the best fit. Now recruiters are faced with a surplus of unqualified candidates and an incredibly saturated job market. Because of these challenges, recruiters must proactively source and effectively market to attract candidates through multiple channels. Although worthwhile, the costs of these initiatives start adding up before a candidate is even hired.

These costs typically include:

• Recruitment expenses, such as advertising, sourcing, and networking take time and money. Companies must budget for job board postings, employer branding efforts, and recruitment software.
• Interviewing and vetting costs, such as applicant tracking systems to pre-employment assessments, each step in the screening process comes with a price. If companies are considering nationwide or global talent, travel and accommodations for final interviews can further drive up expenses.
• Onboarding and training once the talent is hired. A report from the Society for Human Resource Management (SHRM) estimates that the average cost per hire is $4,700, but factoring in lost productivity and training, the total can rise to three to four times the position’s salary.
• Severance and legal risks including severance payouts and, in some cases, potential legal disputes if the new hire does not work out. Even one wrongful termination case can lead to hefty legal fees.

Effect on Productivity and Morale

Beyond financial losses, a poor hiring decision can significantly impact the overall productivity and culture in the workplace. When a new hire underperforms or leaves, existing employees must take on additional responsibilities, often leading to burnout, missed deadlines, and strained team dynamics. Frequent turnover also disrupts workflow, stalling projects and preventing teams from operating efficiently toward long-term goals.

Additionally, constant staffing changes create instability within the workplace, lowering employee morale and engagement. When colleagues witness high turnover, they may begin to question leadership’s hiring decisions and their own job security. In turn, the time and resources spent training new employees go to waste when they leave prematurely, forcing teams to start the hiring and onboarding process all over again.

Brand Reputation and Strained Client Relationships

Beyond internal effects, a bad hire, especially those in client-facing roles, can have lasting consequences on both client relationships and brand reputation. An employee who lacks the right skills or professionalism may struggle to understand client needs, leading to dissatisfaction, lost business, potential harm your company’s reputation. Frequent turnover in these roles creates instability, so clients may question the company’s reliability and look elsewhere for alternatives.

Aside from client relationships, high employee turnover signals deeper internal issues within the organization to future employees. If team members are consistently leaving or underperforming, it becomes harder to attract and retain top talent, further impacting the company’s long-term success.

Avoid the Cost of a Bad Hire with Profiles

Making the right hiring decision from the start is key to avoiding these costly setbacks. Profiles specializes in connecting companies with top-tier marketing, creative, and digital professionals that align with your  company culture and hiring needs. Our expert team takes the guesswork out of hiring by strategically attracting and thoroughly vetting candidates, ensuring you receive high-impact professionals who drive results. Profiles can help you find a seamless fit, from the start.