Stats: the true cost of a bad hire

Hiring the wrong person isn’t just a headache. It’s a costly mistake, and not just in terms of salary. 

The ripple effects of a bad hire can hurt your team’s morale, waste precious time, delay growth, and quietly drain your budget.

This post breaks down the real costs, both direct and indirect, backed by research, expert insight, and industry stats. 

Whether you’re a startup founder, HR lead, or team manager, this is your quick-fire guide to understanding what a bad hire really costs and how to avoid it next time.

Key stats at a glance

Let’s start with the numbers:

• A bad hire can cost £132,000+ for a mid-level role (Recruitment & Employment Confederation). 
• 74% of employers admit to hiring the wrong person (CareerBuilder). 
• The cost of replacing an employee is estimated to be 30% to 400% of their salary (Gallup)
• Brandon Hall Group found that companies with poor onboarding practices are twice as likely to lose new hires within the first year.
• A study by Leadership IQ showed that 46% of new hires fail within 18 months, and 89% of those failures are due to attitudinal reasons, not lack of skills.

Direct and indirect costs of bad hires

Here’s what most people do think about when hiring goes wrong:

1. Wasted salary

If someone isn’t contributing meaningfully, every month they’re on your payroll is money down the drain.

Let’s say a £50,000 salary runs for six months before you part ways. That’s £25,000 gone.

2. Recruitment fees

If you hired through an agency, you’re likely to have paid 15–25% of the annual salary. For a £50k role, that’s up to £12,500 with no refund if things don’t work out after the rebate period.

3. Training and onboarding

Onboarding and getting new employees up to speed takes time.

According to Glassdoor, it takes an average of 12 weeks for a new hire to be fully productive. The time, tools, and team effort involved come at a cost, usually in the £3,000–£5,000 range.

“A single bad hire can set your company back six months or more. The smaller the team, the harder the hit.” - Claire Hughes Johnson, ex-COO at Stripe

There are also indirect costs, which are often overlooked, yet are still damaging. 

4. Lost productivity

While a good hire lifts the load, a bad one slows things down. Projects get delayed, errors creep in, and your team ends up covering the gaps.

According to the Undercover Recruiter, poor performers drag team productivity down by 30 to 40%. That’s a huge hit, especially in small teams.

Hiring the wrong person is the fastest way to undermine a sustainable business." - Howard Schultz

5. Impact on morale

When someone’s not pulling their weight, or creating friction, it erodes trust and team spirit. High performers get frustrated. People start to leave.

In a study by Leadership IQ, 93% of managers said bad hires negatively affect the team. 

6. Time drain

Managers spend hours coaching, correcting, or handling performance issues. That’s time they could’ve spent driving the business forward.

According to HBR, leaders spend 17% of their time dealing with poor performers. That’s nearly a day per week.

The opportunity costs of a bad hire

Every wrong hire is a missed opportunity. What if you’d hired someone else who:

• Accelerated delivery.
• Strengthened culture.
• Brought in new ideas or clients.
• Grew with the business.

You don’t just lose what the bad hire failed to deliver, you lose the upside that the right person might have unlocked.

“The true cost isn’t just money. It’s time, focus, and trust. And you only realise it once the damage is done.” - Lars Schmidt, founder, Amplify Talent

What you can do about it

First of all, it’s important to understand why bad hiring decisions are made. 

A Gallup survey found that hiring managers are often taking a chance on candidates, glossing over lack of skills perhaps under pressure to fill vacancies as quickly as possible. 

You can’t eliminate all bad hires but you can reduce your odds. Here’s how:

1. Be crystal clear about the role. Vague job specs lead to vague performance. Define outcomes, not just responsibilities.
2. Involve multiple decision-makers. Different eyes spot different red flags—and help reduce bias.
3. Prioritise values and behaviours. Competence matters, but attitude and alignment are just as critical.
4. Onboard with intention. New hires need structure and support. A weak start often leads to weak performance.
5. Be quick to correct course. It’s OK to admit when it’s not working. Dragging it out only makes it worse for everyone.

Final word

A bad hire isn’t just a bad fit, it’s a business risk.

If you’re a startup or scale-up, every hire is a strategic bet. Get it right, and you grow. Get it wrong, and you could lose time, money, morale, and momentum.

Hiring isn’t just about filling seats. It’s about building the future of your business. Make every choice count.