Recruiting and hiring good employees is arguably the most critical aspect of running a small business. Finding the right candidates is crucial: After all, if you're not hiring the right people to begin with, your ability to succeed in nearly everything else you do will be greatly compromised. That's why it is important to consider the cost of a bad hire — which can be surprisingly high.

Why it's important to recruit the best

Your company loses more than time, money and effort by recruiting, hiring and training people who perhaps shouldn't have been brought on in the first place. You must also deal with the havoc that the wrong employee can create: the business you may lose when that individual interacts with customers, the cost you incur when you have to repeat procedures that were handled ineptly and the pressures on other employees who must pick up the slack. But the cost of a bad hire doesn’t end there.

Consider the expense and hassle that you face when you have to cut your losses and dismiss this wrong hire. In the long run, it's more difficult for the manager and team to accommodate a poor performer than it is to invest in recruiting quality candidates.

The wisest hiring managers put in the time and effort on the front end to make sure they have the best available pool of applicants for every job opening. And determine whether they have good procedures in place for evaluating candidates.

The cost of a bad hire: higher than ever

The biggest mistake you can make when you're in the market for new employees is to rely on the same tried-and-true methods you've been using for years. Consider the following factors that compound the cost of a bad hire:

  • A lot more is at stake today than in the past. Long gone are the days when you could minimize the consequences of a bad hiring decision by finding a place for a new hire who isn't fitting in. The pace and pressure in today's workplace are too great. Everybody has to contribute, which means more than simply doing one's own job. It means having a measurable impact on a company's ability to compete, maintaining high quality standards, and keeping customers happy and costs under control.
  • The qualifications for jobs that were once considered routine are escalating. With fewer layers of management present in most small businesses, today's line employees must do their jobs with less supervision than in the past. Not every employee can flourish in this kind of environment.
  • Technology is having a huge impact on work processes. Because just about every task in business has to be done faster than ever, companies of every size are relying on technological advances to streamline day-to-day operating procedures. Few small businesses can afford to have employees who resist their best efforts at change management and continue to have difficulty adjusting to a more rapid pace and increasing demands.

How to avoid a bad hire

What’s the easiest way to avoid the cost of a bad hire? If you don't have the time and resources to devote to identifying and evaluating candidates, you can get help. The next time you need candidates, consider working with a small and midsize business staffing and recruitment expert.

Read the infographic text.

Costs of a Bad Hire Revealed

Does your hiring process help you make the right decisions or lead you down a path of costly mistakes? Read on to see just how much a bad hire can cost you …

Among small and midsize business owners and managers polled:

86 per cent admit making a bad hire.
54 per cent believe most hiring managers underestimate the complexity of the hiring process.

Percentage of business owners surveyed who experienced the following outcomes due to a bad hire:

61% time wasted hiring and training someone
56% increased stress on the team
30% increased stress on the manager
19% decreased confidence in management’s ability to make good hiring decisions

Do you have 27 weeks to spare?

Even when firms realize they have made a hiring mistake, they are slow to take action.

Realized Bad Hiring Decision

44 per cent said it took less than a month to realize they made a bad hiring decision…

Time It Took to Let Person Go

but it took more than three times that on average (16 weeks) to let the person go.

Time Passed Before a Replacement Started

Seven more weeks passed before a replacement started working, with 70 per cent of businesses putting the added workload on existing staff during this time.


BRANCH OUT. 56 per cent of respondents said the best new hires come from referrals, including employees and recruiters. Of the businesses that use recruiters, 71 per cent said a recruiter was able to find a candidate they wouldn’t have found on their own.

DELEGATE. 39 per cent said working with a recruiter saved the firm time by doing most of the work; 26 percent said it saved them money by finding someone quickly.

GET A GUARANTEE. 27 per cent of businesses working with recruiters said they do so for the service guarantee.

BRIDGE THE GAP. Along with lining up your next new hire, recruiters can help you find temporary professionals to ease the burden while roles are vacant.

Robert Half survey of more than 400 business owners and human resources managers in Canada at companies with 1 to 499 employees.

Are you taking too long to hire? Find out here:

© 2017 A Robert Half International Inc.