What’s the true cost of a bad apple?

What’s the true cost of a bad hiring decision? Well, it’s probably more than you think.

Based on studies, the average cost of a mis-hire is six-times base salary. This can be even higher for a manager or senior executive – 15 times and 27 times base salary respectively. So what’s this made up of?

Well, there’s the hiring cost in the first place – your own business’s costs and any cost of an outside agency – and the fact that you’re going to have to repeat the whole exercise again.   There’s the on-boarding cost of induction and training – which again you’ll need to repeat.

Then, there’s the salary you’re paying them while they’re not performing. Added to that any severance you have to pay to get rid of them. Don’t forget the opportunities your business may have missed while they’re under-performing.

It all adds up!

And it doesn’t stop there.

While the financial impact is quantifiable, the impact of a bad hire on morale and productivity rank ahead of monetary losses. A bad apple spoils the bunch, so to speak. Disengagement is contagious and is probably a big contributing factor to why only less than one-third of employees report being enthusiastically involved and committed to their work.

Then there’s when a disengaged hire doesn’t pull their weight, good employees get burned out making up for it. That’s an exceptionally high price to pay.

Astounding isn’t it, the overall cost?

When you consider that successful businesses need to run lean, you really can’t afford the price of a bad hire.

Unfortunately, bad hires aren’t always easy to spot. Well, they aren’t using traditional recruiting methods.


That’s because most recruitment relies on experience to assess the suitability of candidates – that’s their CV and a CV-based interview. And this continues to be the norm, despite studies showing that this way of recruiting is only 25% accurate. That’s right, those using experience alone to make hiring decisions, would not hire again 3 out 4 of their current staff if you had the chance again..

We believe that there’s a better way, here at Anderson Scott. A better way to recruit, one that increases the accuracy of hiring the right candidates and reduces the potential heavy losses of a mis-hire.

It’s one based on evidence, evidence that shows that there are other factors, more important than experience in predicting the success of someone in a particular role.

These factors are a person’s wider characteristics and attributes. They’re things like how someone thinks, acts and behaves; the things that motivate them; their values; and the ability to learn new concept and develop new skills.

It’s all of these other things, alongside experience, that make up the complete individual. And when you define the complete individual, and recruit on that basis, the accuracy of hiring increases, dramatically.

Not only that, but hiring on experience tends to leave a lot to gut feeling or – what we term – subjectivity.  You start asking yourself questions like, “Well, they’ve got the right experience but will they actually fit in here”?, to which you’re gut instinct response is either “probably yes” or “probably no”, but it’s always probably you’re never quite sure. It’s not very scientific or robust.

When you look at defining the complete individual, you can change that and start to be objective, rather than subjective. That’s because all of these other things – like behaviours, motivations, values and intellect – can all be tested and measured objectively; unlike experience, which can’t be tested and measured at all!

When you adopt this method, accuracy of hiring the right candidate rises dramatically – to 75%. As a result, the cost of mis-hire reduces quite considerably.

Now this may mean a little bit more time spent up-front thinking about and defining “the complete individual”. It may also cost a little more in the psychometric and personality test and profiling to make an objective call on candidates. At Anderson Scott, we believe that it’s a small price to pay, considering the true cost of a bad apple to your business.