The Rising Cost of a Bad Hire: Why Insightful Hiring Matters Now More Than Ever
The detrimental costs of a bad hire are a growing concern across today’s workforce.
The detrimental costs of a bad hire are a growing concern across today’s workforce.
A bad hire is not just someone underqualified or ill-suited for a role - it can also be someone who exits abruptly, leaving teams understaffed and unprepared. The financial and time costs are significant, but equally concerning are the impacts on workplace culture, morale, and performance.
Fortunately, there’s a way forward. Prioritising an insight-based hiring approach, with a focus on soft skills over more easily trainable hard skills, may be the key difference between a costly misstep and hiring your next future leader.
The True Cost of a Bad Hire
The financial and operational burdens of poor hiring decisions are well known and only expected to grow. A staggering 87% of companies are currently facing or anticipating a skills deficit, with workforce skills gaps projected to cost G20 nations over $11 trillion by 2030 (PwC; McKinsey, 2023).
Gen Z already comprises 27% of the workforce - a figure that will only increase. Alarmingly, 65% of Gen Z employees leave their jobs within the first year (Contreas, 2024; Abode, 2023; FMC Talent, 2024). Their increasing presence highlights the urgency of making the right hiring decisions, particularly when short tenures disrupt teams and increase turnover-related costs.
On an individual basis, the U.S. Department of Labor reports that a bad hire can cost a business at least 30% of that employee’s first-year salary; a cost that increases considerably for specialised positions. Other research argues that replacing an employee typically costs between 50% and 200% of their annual salary (SHRM via HBK, 2025).
To put the exceptional financial costs of a bad hire into perspective, let’s consider the following: hiring an unsuitable data analyst with a £60,000 salary could cost a company up to £120,000 in onboarding, training, lost productivity, and eventual replacement. That’s money that could have fuelled innovation, enhanced customer service, or supported top performers. These costs are especially detrimental for small to medium sized firms where their capital flexibility is more limited.
The consequences of a poor hiring decision extend far beyond the obvious. Our in-house analysis highlights several key areas where costs accumulate—many of which are often underestimated or overlooked entirely. These include:
- Salary and benefits paid before termination
- Recruitment expenses, including agency fees, advertising, and graduate recruitment resources
- Onboarding and training costs
- Managerial time spent addressing performance issues
- Lost productivity and potential damage to client relationships
- And ultimately, the cost of replacing the hire
When all factors are accounted for, the numbers become striking. Our modelling shows that a bad hire earning a £35K salary who leaves within six months can cost the business over £55K. This clearly demonstrates that the cost impact isn’t just cumulative - it’s exponential.
Time, too, is a heavy cost. One study analysing the responses of CFOs reported that managers spend 17% of their time managing underperforming employees; time that could and would otherwise be spent on strategic growth and developing high performers (Apollo Technical, 2025). SHRM report that a vacancy takes on average 42 days to fill, hugely impacting productivity and related costs.
The Hidden Costs of a Bad Hire
While the financial and time-related costs of a bad hire are significant, the broader impact on company culture, morale, and team performance can be just as damaging - if not more so. A poor hire can disrupt team dynamics, drain energy, and create interpersonal friction, leading to widespread frustration. In more serious or poorly managed cases, top-performing team members may become disengaged or even choose to leave, compounding the original loss.
The productivity toll is also clear: underperformance often results in missed deadlines, subpar work, or both - forcing others to pick up the slack, which further erodes morale and efficiency. Over time, the presence of the wrong person in the wrong role can damage the company’s internal cohesion and external reputation, calling into question not only leadership effectiveness but the firm’s values and judgment as a whole. These hidden costs to a bad hire should not be overlooked and can be detrimental to a business’ wellbeing.
The Insight-Based Solution
While the risks are high, so is the potential to solve this challenge. Hiring with insight entails using more than just academic results and experience to judge fit, instead, focusing on character, potential, values, and soft skills.
Insight-based hiring significantly increases the chances of long-term success. Skills-based hires have a 20% higher retention rate (Contreas, 2024; Abode, 2023; FMC Talent, 2024). Such an approach to hiring leads to a more diverse and inclusive talent pool, considering those who may not have had the experience but do have the capacity.
Insight-based hiring reduces time-to-hire, training costs, and turnover. Prioritising soft skills such as resilience, communication, adaptability, and discipline leads to hires who integrate faster, enhance culture, and perform consistently.
add-victor: A Proven Talent Pipeline
At add-victor, we specialise in connecting employers with high-performing candidates from elite sporting or military backgrounds. These individuals - from university athletes to Olympians, and from all three armed forces - are pre-vetted for key attributes such as resilience, coachability, and discipline, all of which are essential for long-term success.
As we look ahead to a future where 50% of employees will require reskilling due to technological shifts (WEF, 2023), hiring people with the mindset and agility to evolve becomes non-negotiable. The candidates we work with exemplify these traits, which is evident in our 90.3% two-year retention rate - substantially higher than the UK average of 69% (CIPD, 2024).
The cost of a bad hire is steep - and rising. But with smarter, insight-based hiring strategies and access to resilient, adaptable talent pools, companies can drastically reduce this risk. The future of hiring isn’t just about qualifications. It’s about potential, mindset, and fit. When you hire right, everyone wins.
Hugo Walsh
References
- https://www.linkedin.com/pulse/true-cost-bad-hire-strategies-first-time-success-bendoraityte--g56pf/
- https://www.apollotechnical.com/cost-of-a-bad-hire/?utm_source=chatgpt.com
- https://www.investopedia.com/financial-edge/0711/the-cost-of-hiring-a-new-employee.aspx?utm_source=chatgpt.com
- https://www.shrm.org/topics-tools/news/employee-relations/cost-bad-hire-can-astronomical
- https://hbkcpa.com/insights/the-hidden-costs-of-bad-hiring-how-to-calculate-your-true-cost-per-hire/?utm_source=chatgpt.com
- https://www.cipd.org/uk/views-and-insights/thought-leadership/cipd-voice/benchmarking-employee-turnover/