Reflections on 30 Years in HR with Lisa Perez, CEO of HBL Resources


There are a lot of important decisions that a company or a manager can make. But one of the most important ones is who to hire for a position. But what you may not know is the sheer cost of a bad hire. 

But it’s not just the financial cost. It causes a ripple effect throughout your company.

I’ve seen too many companies rush into a hiring decision, and in the end, it costs them dearly. I don’t want you to make that same mistake for your next hire!

Dollar, Dollar Bills: Calculating the Cost of a Bad Hire

Before we look at the ripple effects, let’s take a look at the monetary cost of a bad hire. When a person turns out to be a poor fit for the position or the company, there are a lot of costs involved in replacing them. Some of the things that factor into the cost of replacing a bad hire include: 

  • Recruitment and advertising fees
  • Staff time
  • Relocation fees for a replacement hire
  • Outplacement services
  • Litigation fees
  • Expenses of onboarding and training

Ripple Effect: Additional Costs 

There are also some indirect monetary costs 

  • Disruption from incomplete projects
  • Time and energy managing poor performance
  • Impact on team morale and stress
  • Drain on the productivity of current employees
  • High turnover
  • Weakened employer brand
  • Lost customers and risk of diminished customer service

How to Reduce Employee Turnover? 

It starts with changing your approach in the hiring process at the start! 


So what leads to making a bad hire in the first place? According to many managers, their bad hire was the result of making the hiring decision too quickly because they felt the needed to hire someone fast. When you are anxious to fill the vacant position with a body and rush the process, mistakes are made and red flags are missed. You overlook a candidate’s flaws or warning signs that their personality just doesn’t mesh with office culture. 

Personality Clash

Let’s dive into that office culture a bit more and why it’s so important to find someone who meshes well to start with. When a person fits well with the culture of the company, studies show that it has some huge positive impacts. In fact, employees who are aligned with the company on culture have reported increased productivity (over 90%), increased motivation (over 90%) and it leads to greater job satisfaction. Not only that but nearly 60% of employees say that a good cultural fit means they will stick with a company longer–which means you spend less time and money hiring. 

But more than that, hiring someone who is the wrong cultural fit for your company can lead to tension in the office, stress, and anxiety, even with employees who fit well with the company. This can lead to high turnover of some of your best employees as morale is affected. And when you are constantly having to hire, you feel like you have to do it quickly–which leads us right back to what gets many managers into this mess in the first place. It can turn into a never-ending cycle if you let it.

Testing for Culture

You probably want to know how you get out of this cycle if you are stuck in it. You want to know how to reduce employee turnover and instead create a culture of longevity. The good news is, there is a way to break the cycle. It first starts with taking your time during the hiring process and really getting it right. Make sure you really take a close look at each candidate and pair it with a tool like Workzinga’s new Culture Fit Assessment.

Another part is by mastering the art of the interview. Make sure that your company has a standardized process for hiring managers. Give your recruiters the tools they need to formulate good questions to evaluate candidates. Behavioral interviews and peer-to-peer interviews can also help determine if a candidate would fit well into the company culture. 

You also need to consider your company’s branding and how your company culture is conveyed through that branding. Sometimes not properly communicating your culture can lead to a bad hire, because let’s face it, no one wants to work for a company that they would know is not a right fit! Everyone wants to get this right! 

And finally, stop focusing so much on skills and education and focus on assessing the full candidate–including their personality. While training can cost money, it will pay off in the long run when you hire someone who meshes well with the company and sticks around for longer than a bad hire would.