The Cost of a Mis-Hire
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How avoiding recruitment mistakes saves money, time, and productivity
Hiring the wrong person is one of the most expensive mistakes a business can make. While it’s easy to underestimate the financial and cultural impact of a bad hire, research shows the costs can range anywhere from a year’s annual salary to more than 30 times that figure—depending on the role and seniority.
At the CEO level, a poor hire can damage strategy, culture, and performance, with costs running into the millions. At the entry level, the dollar figure may be smaller, but the disruption to team productivity and morale is still significant.
A Hypothetical Scenario: How One Bad Hire Costs $30,000
Imagine you’ve just won a contract and hire 10 employees on $60k salaries. It takes three months to train each person before they reach full productivity.
Now, let’s say one hire is a poor fit and you only realise after three months:
- $15,000 in salary has already been lost to unproductive time.
- Recruiting and retraining a replacement adds another three months of salary.
- Total cost: $30,000—5% of your salary budget—gone.
And that’s a conservative estimate. Add in reduced team morale, productivity loss, and management time spent addressing the issue, and the hidden costs escalate quickly.
Why Mis-Hires Hurt More Than Just the Bottom Line
A mis-hire doesn’t just cost money—it drains energy from your business:
- 🚫 Lower productivity across the team
- 🚫 Negative cultural impact and morale issues
- 🚫 Time wasted on performance management
- 🚫 The risk of repeating the same hiring mistake if the process doesn’t change
How to Avoid Recruitment Mistakes and Mis-Hires
The good news is that mis-hires are preventable. Recruitment doesn’t need to be a “hit and miss” process. With evidence-based recruitment methods—including psychometric testing in hiring—you can:
- Improve the accuracy of hiring decisions
- Reduce the frequency and cost of employee turnover
- Build stronger, more productive teams
- Protect your business from unnecessary financial losses
The upfront cost of doing recruitment properly is fixed—whether the role is $60k or $250k. Compared to the potential cost of a mis-hire, it’s a small investment that pays dividends in productivity, culture, and profitability.
Final Thought
Fermion specialises in psychometric testing for recruitment. Please contact Fermion to discuss how a test of IQ, EQ and a personality profile, or any other psychometric test, can help with you your recruitment decisions.
About the Author:
Christopher Apps is an Organisational Psychologist and the owner of Fermion. He stays updated on the latest psychology research and shares evidence-based insights. The focus of Fermion is "Psychometric Testing for Recruitment" and “Recruitment to Retention: How to Select Good Staff & Keep Them”. If you would like to learn how to select good staff and keep them, please feel free to contact us at Fermion.
“Learn from the mistakes of others. You can’t live long enough to make them all yourself.”
Eleanor Roosevelt.
