3 Ways to Minimize the Staggering Costs of a Bad Hire

Bad Hire - What do I do now.

“At most companies people spend 2% of their time recruiting, and 75% managing their mistakes.” – Richard Fairbank, Founder, Capital One.

Let’s talk about what happens when companies make bad hire choices…

You know it just was a mistake, it’s over with, but did you learn your lesson from it? The best way to do that is to identify the real costs of that bad hire, not just the ones on the surface.

I know, the experience is painful enough. Do we have to analyze why it hurts? Yes. Unless we see and feel the pain of those numbers we’re not going to care enough to make the changes necessary, nor will we appreciate the value of hiring right the next time. 

We can’t always avoid bad hires, but there are certainly some great remedies that you can have in place to help minimize the costs.

#1. Identify the impact of a bad hire on your company.

One brave client recently allowed me to walk him through my bad hire calculator. He boldly looked at the staggering costs of his bad hire. Numbers don’t lie, and they’re not easy to face up to either. You know it just was a mistake, it’s over with, let’s carry on … but unless we take a hard look at these bad hires costs we’re not going to know the value of hiring right the next time.

This client hired a VP Sales Western Region. He was disliked. He didn’t achieve what he was supposed to achieve. He missed deadlines, abused his power, alienated loyal customers and diminished team morale. These are what we call soft costs, the ones that don’t show up in most accounting departments. Scarily, there are no invoices for these bad hire soft costs.

In that particular instance, the hard costs that were invoiced amounted to, in just six months — base salary $120K, plus percs, benefits, equipment, vehicle, relocation costs, training, travel, use of external resources — over $250,000.

What are people saying at their dinner tables about your company as a result of one bad hire? What are the potential lost opportunity costs?  These are soft costs – reduced morale, weakened brand, increased turnover, loss of retention, lost customers.

#2. Own up to your part in the bad hire.

Only two people are accountable for the bad hire, first is you and second is the employee you hired. It takes both of you to own up to your part in the decision to offer and accept employment. A client of mine recently apologized to an employee that was being terminated for his part in the hiring decision. He understood (good old 20/20 hindsight) that they just weren’t as ready as they thought they would be for someone new to come in and manage that part of the business. The employee in turn felt free to tell his side of the story. Both parties showed up big that day.

#3. Cut your losses right away.

One business owner I recently spoke to about a bad hire said that he knew the fellow he’d hired wasn’t right for the job but he thought he’d ‘give him the year‘. Money to burn is the first thing that came to mind. Then I started to think about how we all delude ourselves when the honeymoon is over and we get that itchy inkling that we may have made a mistake. We then rationalize our inertia by telling ourselves things will get better, he/she just needs a little more time, I’m being too demanding on them, they need time to learn the ropes, and on and on it goes. My advice to you is stop it, and cut your losses. Keeping a bad hire is like rat poison to the rest of your team.


Whatever job you do, we bet you are very good at it. Headhunting and recruiting skills are a full-time occupation. When you are ready to save on the cost of bad hires, add an amazing new talent to your team, contact Barbara at Ashton & Associates.



This post has been approved for public release by Barbara Ashton. All certified posts carry this Google Authorship link to Google.