How Much Does a Bad Hire Really Cost?
The costs of a wrong hire are structurally underestimated. We calculate the real impact and show how to prevent it.
Door Ingmar van Maurik · Founder & CEO, Making Moves
The underestimated cost
Everyone knows a bad hire is expensive. But few companies have ever calculated the actual costs. Most HR teams report cost-per-hire, but not cost-of-bad-hire — and that's exactly where the biggest financial leak sits.
Research consistently indicates that a bad hire costs 1.5 to 3 times the annual salary when you factor in all direct and indirect costs. For a mid-level position at €60,000, that's €90,000 to €180,000. For senior or management positions, it escalates to €200,000-€500,000.
But even these numbers don't tell the complete story. In this article, we calculate the real, full impact of a bad hire — including the hidden costs that rarely appear on the balance sheet.
When is a hire "bad"?
Before we calculate costs, it's important to define what a bad hire is. It's not just someone who gets fired after 3 months. A bad hire is:
Important: the silent bad hire — the one who doesn't stand out but also doesn't contribute — is often more costly than one who's quickly identified. They occupy a seat that could have held a top performer, and it sometimes takes 12-18 months before the problem is acknowledged.
The direct costs: what you see on the invoice
Recruitment and selection
The costs of hiring someone are substantial:
Onboarding and training
Before someone is productive, you invest in:
Salary during underperformance
This is the largest direct cost item and is often underestimated. Most bad hires are only identified after 3-6 months. Some not until 9-12 months.
Calculate with 6 months salary for an employee performing at 30-50% of expected productivity:
Departure costs
When the bad hire eventually leaves or is terminated:
The hidden costs: the real damage
The direct costs are just the tip of the iceberg. Hidden costs are often 2-3x higher than direct costs.
Impact on the team
A bad hire doesn't just affect their own seat, but the entire team:
Management distraction
Leaders spend disproportionate time on bad hires:
Customer satisfaction and revenue
A bad hire in a client-facing role has direct impact:
Opportunity cost
This is the most underestimated category:
The complete calculation
Let's work it out fully for a mid-level position (€60,000 annual salary):
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For a senior or management position (€100,000+), you can multiply these amounts by 1.5-2x.
The cumulative impact
For a company making 100 hires per year with an average failure rate of 15%:
How to prevent it
The solution isn't more interviews or stricter requirements — that only leads to longer time-to-hire and worse candidate experience. The solution is fundamentally better selection through better data.
1. Validated pre-assessments
Assessments that actually predict job performance, not generic tests with limited predictive value. Custom assessments based on your success profiles, continuously validated against performance data.
2. AI-driven screening
AI CV screening that goes deeper than keyword matching. Predictive models that recognize patterns in successful hires and apply those patterns to new candidates.
3. Structured pre-interviews
AI pre-interviews that evaluate every candidate on the same competencies, with consistent scoring and bias reduction.
4. Continuous calibration
A system that learns from every hire: which scores predicted success? Which didn't? The model becomes increasingly accurate with continuous validation.
5. An integrated system
Not separate tools that don't communicate, but one integrated hiring platform that combines all data into a reliable complete picture.
The ROI of better hiring
Suppose with a better hiring system you reduce the failure rate from 15% to 10%:
The investment in your own hiring system pays for itself after the first 2-3 avoided bad hires.
Key takeaways
The costs of a bad hire are structurally underestimated. The actual costs — including hidden costs — range between €60,000 and €250,000 per case, depending on level and role.
The core points:
Want to calculate what bad hires cost your organization? Get in touch for a no-obligation analysis of your current hiring performance.