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Talent Talk: The Cost of a Bad Hire for Your Company . . . and Your Career

One expert estimates that a bad hire can cost an employer as much as 27 times his or her salary, not to mention the negative effect it could have on your career.

Paul Sturgeon

April 3, 2023

2 Min Read
employer face down on desk
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What is the actual cost of hiring the wrong person for a leadership role in your company? In precise numbers, the truth is no one can really say, although you can find some crazy estimates.

A widely cited Department of Labor study puts the cost at 30% of the employee’s first-year earnings. Dr. Bradford Smart, author of Topgrading, estimates the cost of a bad hire at anywhere from five to 27 times their salary.

Although the company continues to face challenges, the market capitalization of the Walt Disney Co. is up about $12 billion since it brought back CEO Bob Iger near the end of 2022.

So, can we agree that the financial impact of a mis-hire could be significant? But if you are leading an entire organization, a division, or even a small team, what is the cost to your life and your career?

A leader’s success is largely driven by his or her ability to field a team of top performers. If you can recruit a top performer within your industry, within your niche, and preferably from the competition, that one single person can add hundreds of thousands, perhaps millions of dollars to your bottom line, and propel your career at the same time.

The star performers, the top 10%, the A-players — whatever you want to call them — are the only ones making your company money. A recent McKinsey study found that high performers are 400% more productive than others. They are also the ones who will help you get promoted, as they can step in and fill your shoes when the time comes for you to move up. They also reduce your personal stress and can help you maintain some work-life balance.

There are steps you can take to identify, attract, hire, and retain the people you want, and we will explore all those actions in the weeks ahead.


paul-sturgeon-150.jpgAbout the author

Paul Sturgeon is CEO of KLA Industries, a national search firm specializing in plastics, packaging, and polymer technology. If you have a topic you would like to see discussed, a company that is growing, or other ideas for this blog, e-mail Sturgeon at [email protected].

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