STOP Wasting Money on Bad Hires: The 2026 Resolution for all Growing Companies

Written By Noreen A.

The fastest-growing companies didn’t just leverage technology or capital—they mastered the hiring process, ensuring every team member contributed to their vision for growth and desired corporate culture.

The US Department of Labor estimates that a bad  hire costs companies approximately 30% of their first year’s salary.  This estimate doesn’t include indirect costs like poor productivity, opportunity cost (for revenue generating positions), wasted training expense, negative impact to team morale, and wasted hours spent cleaning up the bad hire’s mistakes.  SHRM estimates that the cost of a bad hire can be FIVE TIMES their annual salary when these indirect costs are considered, particularly for higher level positions. 

Hiring managers make poor hiring decisions for a broad range of reasons including:

1. Urgency over Strategy: They’re tired of the hiring process or need to hire urgently, so they settle for “good enough” instead of continuing to look for the right fit. This usually results in the position quickly becoming vacant again. Hiring “good enoough” can also give employers a false sense of security, particularly for key positions such as HR or management positions. If “good enough” is going to walk out the door within a few months anyway, you are better off waiting for the right fit.

2. Selection Bias: They hire people with similar traits and behavioral styles to their own—while this might work if recruiting for their own position; it’s counterproductive when filling a position that requires different skills.  You wouldn’t want an engineer to hire a sales-person or vice versa, the same applies for many other positions.

3. Interview acumen ≠ job performance: There are a lot of people who are great at interviewing but perform poorly as employees.  If you had a lot of experience interviewing because you were fired often or your new jobs lost their appeal within a few months, you’d be great at job interviews too. Take additional steps to ensure the desired candidate has the skills and experience necessary through pre-hire assessments or by involving personnel familiar with the position requirements in the screening or interview process.

4. Compensation Misalignment: If the salary for the vacancy is below market for your area, your odds of finding the right fit plummet.  If you underpay, you’re not going to attract qualified candidates away from better paying jobs and if you’re lucky enough to recruit someone qualified because they’re on the market, chances are they’re going to keep looking and leave within a few months. This can cost employers a lot more in the long run when filling key positions such as HR, compliance or management roles.

5. Insufficient Vetting: Hiring managers don’t check job history or references thoroughly, sometimes talking to the candidate’s coworker rather than their manager or not verifying job responsibilities within a role.  There are ways to get information beyond the standard dates and job title confirmations, especially with someone who’s been in the workforce for 10+ years. A superficial job history review can overlook critical red flags.

All New Hires Come with Risks

Every time you hire someone new, you increase your risk for an unemployment compensation claim, workers compensation lawsuit, and/or unlawful labor practice lawsuit.  You also commit coworkers and managers to invest time and energy helping ramp up the new hire, often without additional compensation.  When the new hire is separated from employment within a few months, it’s often demoralizing for their team, and can diminish coworkers’ morale and tarnish management’s image. 

Discover 7 strategies to avoid employee lawsuits here>>

If you lead a small or midsize company and wonder how fledgling startups became industry behemoths within a few years—it wasn’t just technology, consumer demand or seed money—they figured out the hiring process because they recognized that their companies would remain stagnant without the right people to help them grow.

Discover how our expertise can help your company grow

Every January companies embark on a hiring spree and the competition often results in poor hiring decisions. If you recognize any of the above factors as contributing to your company’s bad hiring decisions, there is a cost-effective way around each of those challenges depending on your workforce size, industry and management structure. 

Are you ready to make better hiring decisions in 2026?

If your new year’s resolution is to make better hiring decisions, contact us for assistance, or complete our company diagnostic for a free assessment of your current HR challenges.

Noreen A.
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