How Budgeting for Employment Screenings Saves Companies Money

Posted on 11.06.2019

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The right hire can fit seamlessly into your company culture, improve productivity, and even increase your business’s revenue.

The wrong hire? Not so much.

The cost of a bad hire is more than most people estimate. The wrong person can affect your employee retention, your clients, and, ultimately, your bottom line.

Financial Costs

The most obvious cost of a bad hire is, of course, financial. Hiring the wrong candidate means you have to pay that person the initial salary (including any starting bonuses), which you may not recoup on if they don’t meet revenue or productivity goals. But there’s more…

If a hire doesn’t work out, you may need to pay a severance package (depending how long they have been employed and the terms of their contract). And then you will have to restart the recruitment process all over again.

A CareerBuilder survey found 41% of companies priced the cost of a single bad hire at $25,000 or higher. 25% of businesses surveyed placed the cost at $50,000 or higher.

The price can increase with the position’s level. For instance, an entry-level bad hire may cost less than a manager. Positions with more seniority can cost more because their actions (or lack thereof) can affect those around them, too; their behaviour is more likely to hurt the company’s financials; and the recruitment process is often more expensive.

Non-Financial Costs

There are other costs of a bad hire that are harder to quantify but may contribute to the financial costs all the same. These include:

  • Lowered morale. A Robert Half survey found that bad hires impacted workplace morale up to 95% of the time.
  • Lost productivity. Studies have shown that teamwork and productivity dramatically decrease when bad hires affect staff performance.
  • Decreased employee retention. As the saying goes, people don’t quit their jobs, they quit their managers/coworkers. Research shows that over 80% of employee decisions to quit have been directly caused by other staff in the workplace. This can contribute to even more financial costs when you have to fill more vacancies.
  • Increased employee burnout and stress leave. Even when staff don’t quit, they may take more time off work, cite more health problems, and have more workplace stress. This can also contribute to lost productivity and lowered morale.
  • Damaged reputation. A bad hire can directly affect your company’s reputation through harmful interactions with clients, producing lesser-quality work, fraud and theft, and more. However, even the effects of one bad hire’s poor attitude could extend to the rest of the workplace. Consider if other employees begin leaving due to the bad hire and overall output suffers — after a certain point, clients will start to notice.
  • Lost business. In the worst-case scenario, clients won’t just start to notice these issues – they will leave your company for a competitor due to them. This, too, will have a direct financial impact!

The Solution

While it might seem like a bad hire would be easy to spot and get rid of, unfortunately it isn’t always so simple.

It might take time for these issues to come to light, but by then the damage has already been done. Or the bad hire may be manipulative, making the situations always look like someone else’s fault.

Conversely, some employers feel that they have invested the time and money in recruiting this person and do not want to feel foolish for having made the wrong choice. They might also want to give the person the benefit of the doubt and time to prove themselves to their full potential.

It is all too common for a bad hire to stay at a company for a long time while good employees leave, reputation is damaged, and money is lost.

Instead, the best solution for a bad hire is at the front end — preventing a bad hire in the first place.

A good pre-employment background check can spot a host of issues that are not always easy to catch during the traditional application-and-interview process.

For instance, a background check could find:

  • Whether the candidate is lying on their resumé or about their credentials.
  • A history of workplace violence or harassment.
  • Past fraud or theft.
  • And much more.

Spending the little bit of time and money up front for extra due diligence can save a lot in the long run.

Triton Canada offers pre-employment background checks that are efficient and cost-effective. Learn more by calling 1-844-874-8667 or visiting