NEGATIVE RETURNS: What Bad Hires Really Cost


When hiring a new employee, how much does a bad hire cost your company? Turns out, it can be rather expensive.

According to a survey released by CareerBuilder, more than half of the employers from the world’s ten largest economies reported that they have experienced a bad hire. In the US, the rate is even higher: two out of every three U.S. employers surveyed reported making a hire that ended up not meeting expectations, or was a poor fit for the position.

Are you working with a staffing company that offers the convenience of temp-to-perm services with the benefits of extensive background, skills and personality vetting required to minimize bad hires?

If not, how much do bad hiring decisions really hurt?

The Impact and Costs of a Bad Hire

In calculating the costs of a bad hire — whether that is a temp hire or full-time perm. — start by thinking about the areas impacted:

  • Recruiters’ Time and Fees
  • Human Resources Efforts to Onboard
  • Salary and Benefits While Employed
  • New-Hire Training, Onboarding and Orientation Expenses
  • Productivity Losses
  • Business Damage (Lost customers and profitability)
  • Co-workers Morale and Productivity
  • Unemployment Compensation
  • Legal Fees
  • Severance Pay
  • Additional Recruitment Fees to Replace Bad Hire

In terms of real dollars, different sources provide different numbers. But here are just some statistics that are quite stunning:

  • 27 percent of U.S. employers say a bad hire costs the company more than $50,000*
  • It costs $7,000 to replace a salaried employee, $10,000 to replace a mid-level employee, and $40,000 to replace a senior executive
  • The average settlement of a negligent hiring lawsuit is nearly $1 million
  • The average cost of a bad hiring decision can equal 30% of the first year’s potential earningsᵠ

The Importance of Proper Recruiting and Pre-employment Screening

Axelon has a proven track record in the staffing industry, so that means we have the benefit of more than three decades of experience recruiting and pre-screening candidates.

Let’s face it, for certain skill sets it is always going to be challenging to locate qualified talent. But that should never lead to cutting corners or compromising your decisions, leading to a bad hire.

Ultimately, bad hires are often the results of a cultural mis-match between the company and the new employee, a lack of expertise or results, or a change in priorities from either party — all of which usually can be better evaluated and validated with actual time spent in action. The temp-to-hire option provides this time. It allows for both parties to better appreciate the other specificities and confirm a strong match. If not, then project ends normally. It definitely sounds to me like a win-win solution.

* SOURCE: 2013 CareerBuilder Survey

SOURCE: Recruiting Times

 ‡SOURCE: Human Resources Management

ᵠ SOURCE: The U.S. Department of Labor

To contact Tania Obeid directly, please email

To learn more about this topic or to request a consultation and explore how Axelon can provide your organization with more high-quality candidates faster than any other contingent workforce provider, call us 877.711.8700 or email

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