Most employers have been there; in their eagerness to fill a position, they hire a candidate who appears just peachy on the surface but turns out to be a lemon.

If you’ve hired an employee you regret and your business suffered for it, you are not alone. This study reveals that 69% of companies report being negatively affected by bad hires.

Everyone knows that bad employees are a drain, but what are the most egregious effects of hiring the wrong candidate?

Top 5 Negative Effects of Bad Hires

When asked to list the negative consequences they observed on their business after hiring the wrong candidate, employers listed many problems. These were the top five:

  • Lower productivity – chosen by 39% of respondents
  • Lost time from finding and training a replacement – 39%
  • Cost of finding and training a replacement – 35%
  • Negative employee morale – 33%
  • Negative impact on clients – 19%

Lower Productivity

Employers ranked lowered productivity as the highest consequence of bad hires. Their claim is backed up by another study which measured how much of a manager’s time was wasted on struggling employees:

  • CFOs surveyed estimated that Managers spent 17% of their time, so almost 1 day a week supervising a bad hire.


Third on the list of negative effects are costs. How much does a bad hire really cost the company, dollar for dollar?

  • 41% of employers who dealt with a bad hire estimate it cost them over $25,000
  • 24% of employers who dealt with a bad hire estimate it cost them more than $50,000
  • The U.S. Department of Labor estimates that the average cost of a bad hire can be around 30% of a company’s first year revenue potential.

Team Morale

Morale was ranked fourth on the list of the top 5 damaging effects of bad hires, but it is perhaps the most painful wound because it resonates long after they’re gone; not only do poor employees disrupt the work equilibrium while they’re present, their termination often sets other employees on edge.

  • In the same survey of CFOs, 95% agreed that bad hires affected company morale, with 35% saying it greatly impacted employee morale.

The Bottom Line

Everyone knows that a bad hire can hurt a company, and nobody intends to hire a bad employee. But oftentimes, in a frenzy to fill a position, employers will hire quickly without asking the right questions and looking out for red flags during an interview.

It’s important to run the proper background and credit checks, to get good references from other employers and to meticulously follow all the steps of a thorough hiring process. The opportunity costs of leaving a position unfilled may be tough, but the costs of hiring the wrong person could be devastating.