Organizations that focus on long-term gains do a data-driven returns-on-investment analysis for each decision. Acquiring the right talent is one such crucial decision for any company. A bad hire, especially in the case of smaller companies, can be a bigger worry as compared to the investment made in the right candidate. But even bigger organizations cannot bear the cost of poor performers. As cited by Tony Hsieh, the CEO of Zappos, the estimated cost of bad hires to the company was more than $100 million.  

Organizations must answer this question for themselves while hiring; are they focusing on short-term cost saving or investing for profits in the long-term? Empirical evidences promote the latter in achieving long-term business goals. According to a study on talent acquisition by Brandon Hall, companies that invested in hiring the highest potential candidates saw a 70% improvement in the quality of their hires. 

So what are the factors that organizations need to keep in mind so that their hiring gives them the best ROI? Here are some of the major ones. 


As per the Brandon Hall Group study, efficient recruitment and on-boarding improves productivity by 70% and employee retention by 82%. Human Resource experts, worldwide, are in the favor of hiring the best possible candidates, considering the time, effort and cost involved in finding the right person-job fit. In a survey of Chief Financial Officers by Robert Half International, 39% confirmed that poor hires affect productivity in a negative way. The success of other stages of employment post-hiring, such as employee engagement and employee job satisfaction depends on whether the right candidates are hired in the first place. Excess time spent on training or managing personality conflicts can hamper productivity. Simply put, hiring the right talent for a role is better than fixing the problems that may arise due to a bad hire. 

financial costs

The whole premise of cost saving while hiring goes for a toss when you consider the potential costs of bad hires. These costs are additional to the remuneration paid to these employees. The estimated cost of a poor hire can equal to 30% of the employee’s first-year earnings.


Moreover, bad hires are more difficult to retain and will eventually make you recruit all over again. Typically, the cost of replacing an employee is 21% of their yearly salary. These costs must also be evaluated in terms of time and effort which eventually adds to the overall efficiency of the business. 

employee morale 

There is nothing such as bad talent but only bad hires. The recruitment process needs to be thorough in terms of finding candidates that not only fulfil the requirements of a job role, but also fit the culture of the organization. Recruiting managers need to make sure that the talent that they bring in stays and is also engaged in the appointed role. A mismatch in the role and the candidate can lead to disengagement. Study shows that employees tend to experience the ‘honeymoon effect’ meaning that their job engagement tends to deteriorate in a short span of time. Employees with lower engagement tend to affect the morale of other employees as well. Another implication of bad hire on the cohesiveness of the team. It is usually difficult to work with a team member who doesn’t fit his role well. According to the Robert Half survey, 39% of CFOs were concerned about the negative impact of bad hire on the employees’ morale.  

company reputation 

Another important criterion to consider while hiring is your brand image. Employees are your internal customers and they must take away a positive impression of your employer brand. A bad hire is likely to have a bad experience at the job and that increases the chances of bad publicity. In the era where employees are well connected to platforms providing company reviews, you must work towards earning a positive one, for which hiring the right talent is a prerequisite. For a bad reputation of an organization can increase its cost of hiring at least by 10% per hire. 

Essentially, while choosing between saving costs and hiring good talent, it is always beneficial to go with the latter. 

about the author
yashab giri new
yashab giri new

yeshab giri

chief commercial officer - staffing & RT professionals

yeshab is responsible for leading the development and expansion of randstad India’s value added staffing services which currently encompass field force, engineering and technology roles.