The Real Cost Of Bad Hiring Decisions (And How To Avoid Making Them.(By Forbes)
CEO and Strategic Recruitment Advisor
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How Much Does Hiring Cost?
It’s likely your business may have a few open positions at any given time. The Great Resignation aside, workers leave and businesses expand even in more predictable economic climates. Here are a few cost considerations that should be top-of-mind when you’re hiring:
• A new hire can cost over $4,000 even before wages and salary, which includes the cost to advertise on various job sites among other hiring expenses.
• Even then, most companies spend more per hire than just a salary. The average salary doesn’t take into account the actual cost of each employee, such as healthcare coverage, 401(k) matching, and employer portion of the social security tax.
• The U.S. Small Business Administration (SBA) notes the cost to hire a new worker is around 1.25 to 1.4 times the base salary.
That’s just for starters. You should also consider how long it will take for the new hire to become fully activated and begin producing a return on investment. The onboarding period could be anywhere from three months to a year, depending on the complexity of the role and the prior experience of the new hire. That’s partly why a Gallup study determined that the cost to replace workers who quit can be anywhere from one-half to two times the workers’ salary. Depending on the role, you could be spending tens or hundreds of thousands of dollars on just one hire. If it’s a bad hire, and that individual quits before they’ve recouped your hiring costs, that’s going to reduce a loss to potential profits.
How To Improve Your Hiring Process
There’s no getting around the cost to hire. That’s something you should consider to be part of business. However, poor hiring decisions are more likely to create a negative feedback loop that leaves you constantly hiring for the same positions due to high turnover.
One key to reducing those high costs associated with hiring? Not putting yourself into the situation where you have to keep rehiring for the same position. That starts with making better hiring decisions in the first place.
1. Create better job descriptions.
2. Move efficiently through the hiring process.
3. Consider utilizing automation tools.
4. Conduct better interviews.
5. Offer better compensation.
Commentary-
The Cost of the Wrong Hire
The cost of hiring the wrong person can be a sensitive subject—and it should be handled with respect and compassion. After all, we’re talking about people’s lives here.
Obviously, given my experience in executive search, I have a few thoughts.
Let’s start with the hiring process. Honestly, I think it’s one of the biggest problems in our industry. Meeting with a potential employer should feel purposeful—even enjoyable. I’m not saying we need to roll out a red carpet, but feeling like there’s mutual alignment early on is important. The truth is, great opportunities often hinge on timing. If a process drags or lacks clarity, it risks missing out on amazing talent. On the flip side, candidates also need to be upfront and honest about their timelines and where they are in “their own process.” It’s only fair, right?
Better interviews? Absolutely. Too often, we see candidates meet multiple people only to discover the role calls for a background or skill set completely different from what they bring to the table. Let’s work smarter, not harder—together, not against each other.
As for candidates: preparation is everything. I’ve worked with people who want a 20% raise but can’t articulate how they’ll bring in new relationships to the bank. You’ve got to do your homework and show up with intention.
Now, let’s talk money. “You catch more flies with honey” applies to hiring, too. Compensation is a major part of what we do, and it’s a big piece of how we create value. Everyone brings different experiences, skills, and value-adds to the table. My job is to help you leverage your background within the available range—and sometimes, even beyond it.
Compensation is a vital consideration for a lot of people. If you're a young professional saving for a wedding, a home, or a new chapter of life—or a seasoned professional navigating college tuition or planning for retirement—it all matters. But here’s the thing: while compensation is critical, the highest-paying job isn’t always the right one. More money often comes with more responsibility.
So, how do we navigate those awkward conversations? Full transparency. Set expectations early. We’re only as good as the information we have. Clients want a range. Candidates have a range. Let’s put our cards on the table—because nobody makes a move unless it makes financial sense.
Let’s get to it.
Luke