Cost of Making a Poor Hire


McQuaig Report-Vol.1-Do You Know How Much Hiring Mistakes are costing your company

DO YOU KNOW HOW MUCH HIRING MISTAKES ARE COSTING YOUR COMPANY? Study after study lists “hiring and retaining talent” as one of the key issues that keeps CEO’s awake at night. If you have the right people on board, the issue of motivating and driving them to produce results largely goes away. If you don’t have the right people, the best strategy in the world won’t save you. That said, most managers are less scientific about hiring their greatest resource than they are when buying a piece of equipment – they replace rigorous analysis and reference checking with general impressions and gut feel.

HIRING MISTAKES FALL INTO TWO CATEGORIES: False positives: In this scenario, a promising candidate is hired, but does not deliver once on the job. The cost of this mistake is generally accepted to be two to three times the individual’s salary. False negatives: In this case, a talented, but not interview-savvy candidate is passed over. The cost of this mistake is the opportunity cost of not having the best person possible – lower productivity, lower sales, missed deadlines, etc. In his book, Topgrading, Dr. Bradford Smart estimates this opportunity cost to be twenty-four times salary for senior roles. The cost of a hiring mistake is especially high in demanding roles like leadership, sales and professional where the ramp-up time is several months and the talent pipeline is drying up.


• Being overwhelmed by gut feel

• Over-relying on information obtained in unstructured interviews

• Not having clearly defined expectations

Published on LinkedIn