Bad Hire Calculator

What’s the True Cost of a Bad Hire?

Use our Bad Hire Calculator to unearth the true costs of a hiring decision and see what you can do to save your company loads of time, budget and — most of all — your sanity.
Every manager knows a bad hire costs them.
That’s a fact.
But the costs come in so many different ways, they don’t often really know the true impact that a bad hire can have in dragging down a business.
Whether it’s through lost time onboarding, endless interview sessions, time spent on performance improvement plans, time spent by others trying to make up for an underperforming colleague, poor performance leading to lost clients/sales or the increased risk of a lawsuit that a bad hire might pose, the costs come from every direction.

3 Questions, Real Answers

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Now What?

There are experts (ahem, that’s us on the Loophire team) who can help your company avoid these costs — our 100% hiring success rate and 96% retention rate a full year later are a testament to that!

If you don’t solve the problem, beware that it’s the bad gift that keeps on giving. Every year you spend growing and not fixing the problem, you’re compounding the problem. If you can manage to grow your workforce despite these headwinds, you’re looking at even higher annual costs when you misstep.

And let’s assume, to be ultra-conservative, your company is at least breaking even on salary. If that bad hire has a 5% drag on business, that could be costing you real revenue per year. And sometimes the bad ones end up sticking around for years because managers and HR teams know that letting a person go means going through another round of (potentially treacherous) hiring.

Trust the Facts

74% of Employers

say they have hired the wrong person for a position.
Source: 2017 CareerBuilder Survey

$1 Trillion

in estimated turnover costs incurred by U.S. companies each year.
Source: Gallup

6 months

is how long leaders expect it takes for a business to break even on a single hire. Six months!
Source: Harvard Business Review
How can the costs be so high?
Yeah, it’s a big number. But the real question is: How could the costs not be this high?! We mentioned productivity, onboarding costs, etc., but you know as well as anyone the hidden costs are endless.

Say you hired a bad salesperson. Not only did they meet, for instance, 60% of their quota, but the money they didn’t earn couldn’t be used to hire that administrative person you need to supercharge your entire sales team. Or say after the salesperson left, your HR team was bogged down finding a replacement and arrived mere hours late with an offer for a home-run candidate who accepted a job elsewhere. It’s hypothetical in this situation, but companies are constantly hiring, which means this type of thing happens.

And then there’s the team. Imagine how your top performer feels if they really wanted that admin that you weren’t able to get to help them process post-deal paperwork. They might start to mentally check out — maybe productivity dips 10% — or leave altogether. And who knows if their replacement might be 60% as effective, too. Before you know it, your revenue per employee has taken a huge hit! It’s a potential domino effect, and in some companies the odds are real that it becomes a death spiral.

Now spread that over a whole team whose morale might be impacted by a toxic or underperforming colleague.

When morale, stress, or downright underperformance happens, mistakes happen. You just have to hope it doesn’t happen with one of your biggest clients and it costs you even more revenue on the bottom line.

Even at a basic level, everyone knows the paperwork required for every departure (and their replacement hire) is time your HR person is never going to get back.

Associated Costs of a Bad Hire

There are dozens of ways a bad hire costs you. They include:

  • Time and expenses associated with onboarding & training new employees
  • Hours spent reviewing resumes and interviewing candidates and recruitment advertising fees
  • Time and energy managing poor performance
  • Drain on productivity from disrupted projects and lack of continuity of work
  • Impact on team morale and stress
  • Risk of diminished customer service
  • Increased risk of legal fees from unlawful termination or discrimination claims
  • Decreased customer satisfaction
See How We Can Help
Case Study: How We Helped One Business Fill Year-Long Vacancies

Finding skilled CNC machine operators was a constant struggle for Brand Hydraulics. The company built a reputation on quality machining and their vacancies were stretching staff thin. “We had a backlog of orders and couldn’t keep up without new staff.” In stepped Loophire.