Lost productivity costs and hiring costs are two expenses that occur when making a bad hire. These may seem like minor issues during the recruitment process, but expenses can add up quickly. There is now a tool that can tell you just how much your company is spending on these bad hires.  


  • Many organizations don’t know the true cost of making a wrong hiring decision, according to Thrivemap. Thrivemap developed a calculator that takes an organization’s current headcount, annual headcount growth percentage and staff turnover rate and estimates that cost. The final cost estimate accounts for lost productivity costs, as well as hiring costs like advertising and agency fees, Thrivemap said in a press release emailed to HR Dive.
  • As an example, the company calculated the bad hire costs for a company in the hospitality industry with 500 employees, an annual 5% increase in headcount and a 15% turnover rate. The costs added up to £406,038, or more than $500,000.
  • Lost productivity is a cost that businesses experience often but shouldn’t ignore, according to Thirvemap. The company said that research it conducted earlier this year found that workers who felt they fit their role and their employer’s culture gave their productivity a 7.2 rating out of 10, compared to the 5.3 rating that those who felt they were a bad fit on both counts gave their productivity.

A 2018 Salary.com report said that turnover is at an all-time high, which puts more pressure on talent pros and hiring managers to avoid hiring mistakes. With turnover and the cost of attrition top of mind for employers, it might be prudent for talent pros to also consider the productivity costs that result from bad hires, too. One example from Thrivemap indicated that the difference in productivity between a good-fit employee and a bad hire can be as high as 36%.

Thrivemap points out that when HR can account for and calculate costs associated with its functions, in this case hiring, it comes closer to its proverbial seat at the table. HR must be able to understand financials, establish its own key performance indicators and show the top brass that it can hit those benchmarks for success, experts have told HR Dive. To stand a better chance of avoiding bad hires altogether, experts have said that talent pros can:

  • Have a robust interview process with multiple people, diving deep into experience that is critical to the role;
  • Use assessments related to the job;
  • Thoroughly go through the reference process;
  • Articulate the company culture.

In addition, any tools that can predict what bad hires are currently costing could help HR departments and talent professional make a case for adopting better sourcing and screening tools within their organizations. Investing in tools that can better identify hires with the right skills and who are the right culture fit might keep bad hire costs from becoming a chronic drain.

SOURCE- Bolden-Barrett, Valerie. (25 July 2019). “Bad hire calculator aims to estimate the cost of failed recruits” (Web Blog Post). Retrieved from https://www.hrdive.com/news/bad-hire-calculator-aims-to-estimate-the-cost-of-failed-recruits