Most employers can probably think of a hire that did not work out.
What is harder to put a number on is what that hire actually cost the organization.
The salary paid while the person was there is only part of it. Add recruiting, onboarding, training, lost productivity, management time, and then starting the hiring process all over again, and the cost can grow quickly.
A widely cited estimate puts the cost of a bad hire at up to 30% of that employee’s first-year earnings. For someone earning $50,000, that would be about $15,000. A 2017 CareerBuilder survey reported a similar average cost of $14,900 per bad hire.
And for a smaller organization, the impact may go beyond the dollars. When one position represents a meaningful part of the team, having the wrong person in that seat, or having the seat open again, can affect everyone around it.
Where does the cost actually come from?
There usually is not one invoice labeled “bad hire.”
Instead, the cost shows up in pieces.
There may be recruiting expenses to advertise and fill the position again. Managers and coworkers may have spent weeks training someone, only to repeat that process with the replacement.
Productivity can be lost while the employee is learning the role, during the period when things are not working out, and again while the position is vacant.
Other employees may take on additional responsibilities in the meantime. Depending on the role, there can also be an impact on customers, deadlines, service levels, or team morale.
In some situations, there may be additional costs related to unemployment, separation, or legal issues.
Individually, those expenses may not seem significant. Added together, they can make one hiring decision much more expensive than it first appears.
That is why we created the Bad Hire Cost Calculator on corpintel.com. Employers can enter a salary and see an estimate of what a bad hire could mean financially for their organization.
Why do bad hires happen?
Bad hires can happen for a lot of reasons, but one of the biggest risks is making a decision based on information that was never actually verified.
A resume and interview tell an employer what a candidate presents. They do not necessarily confirm whether employment history, education, credentials, or other important details are accurate.
Sometimes discrepancies are minor. Other times, they may reveal exaggerated experience, inaccurate dates, credentials that cannot be confirmed, omitted information, or other issues an employer would want to understand before making a hiring decision.
That is where screening adds value. Verification work helps compare what was presented during the hiring process against information available from the appropriate sources, giving the employer a more complete and documented picture before moving forward.
What can structured screening actually change?
A background check cannot tell an employer whether someone will be a great employee. It cannot predict personality, promise job performance, or eliminate every hiring risk.
What it can do is help reduce some of the unknowns.
Depending on the position, a structured screening program may include criminal record searches, employment and education verification, professional license verification, motor vehicle records, drug testing, healthcare sanctions, or other components relevant to the role.
Screening works best when it is not treated as a box to check at the end of hiring, but as one more source of documented information the employer can use when making its own decision.
How CIC supports the process
Corporate Intelligence Consultants has worked with employers since 1977, and we do not believe background screening should be one-size-fits-all.
CIC works with employers to understand the positions they are hiring for, the responsibilities involved, and the information they actually need from the screening process.
Depending on the role, reports may include county, state, federal, or multi-jurisdictional criminal searches; employment and education verification; professional license verification; motor vehicle records; drug screening; healthcare sanctions; and other screening services.
CIC provides the information for employer review, while the employer remains responsible for making the hiring decision.
Our research and quality assurance teams also review reports before release. If something does not match or requires additional research, that extra review helps make sure employers are receiving information that is appropriately connected to the applicant rather than simply passing along whatever a search happens to return.
A few common questions
How much can a bad hire cost?
The amount varies significantly depending on the position, salary, training involved, and how long the employee remains in the role. One widely cited estimate places the cost at up to 30% of the employee’s first-year earnings. CIC’s Bad Hire Cost Calculator can provide a simple estimate based on salary.
Can a background check prevent a bad hire?
Not entirely. No screening process can predict whether someone will perform well or be the right fit for a team. Screening can help employers verify information that matters to the position and identify discrepancies or relevant records before making a decision.
Is screening worth it for a smaller business?
Small employers may actually feel the effect of a hiring mistake more because each employee can represent a larger portion of the operation. Screening does not need to be complicated or built for high-volume hiring. The important part is selecting searches that make sense for the roles being filled.
Closing thought
Hiring will always involve some judgment.
The goal of background screening is not to remove that judgment. It is to give employers better information to use alongside it.
A resume, application, and interview tell one part of the story. Screening can help verify the parts that matter most before an employer makes the investment of bringing someone onto the team.
And when you compare the cost of appropriate screening with the potential cost of starting the entire hiring process over again, it is worth asking whether your current process is verifying what you think it is.
CIC works with employers to build structured screening programs around their positions, hiring practices, and risk considerations. To get a better idea of what one unsuccessful hire could cost your organization, try the Bad Hire Cost Calculator or talk with the CIC team about what your current screening process covers.
This blog post is provided for informational and educational purposes only and does not constitute legal, regulatory, or compliance advice. The Fair Credit Reporting Act and related federal, state, and local laws are complex and continue to evolve. Corporate Intelligence Consultants is a consumer reporting agency and is not a law firm. Employers may want to review their own screening program, forms, and processes with their internal compliance team or legal counsel before relying on any information in this post.