The true cost of a bad hire: how to protect your team and budget

In August, the Australian Bureau of Statistics (ABS) reported job growth of 58,000—well above the 2024 monthly average of 38,000. Additionally, 22% of employers plan to expand their teams over the next three months, a 4% increase on the last report.

Despite these “green shoots” in the labour market, 50% of employers still report struggling to fill vacancies. While these numbers signal positive movement, many hiring managers in Canberra are feeling anxious about the recruitment process, often due to lingering fears of making a bad hire.

The fear of getting it wrong

For many hiring managers, expanding a team or replacing a team member can bring a sense of dread. Bad hires from the past can cast long shadows, making managers cautious about decisions. It’s common to hear managers express frustration when a seemingly promising candidate doesn’t deliver on the job. Even a well-structured hiring process – complete with job descriptions, selection teams, interviews, and reference checks – can fail.

The hidden costs of a bad hire

Hiring mistakes are costly. A bad hire doesn’t just drain financial resources; it also wastes time, energy, and negatively impacts team morale. The costs of recruiting, onboarding, and training someone only to see them exit prematurely are considerable. Worse still, bad hires can disrupt a team’s flow, increase tensions, and reduce productivity. The Australian Business Review Weekly once estimated that a bad hire can cost an organisation 2.5 times the employee’s annual salary. This is a staggering figure, particularly when 20% of employees leave within their first 45 days.

Given these stakes, how do so many organisations still get hiring wrong?

Common pitfalls and how to overcome

After more than 20 years in professional talent acquisition, I’ve noticed recurring mistakes in the hiring process.

Here are some of the most common errors and the simple steps you can take to avoid them:

1. A poorly defined job description

The job description is the foundation of any recruitment process. Yet many organisations treat it as an afterthought, recycling outdated versions without proper reflection or updates. A clear, well thought out job description not only outlines responsibilities but also defines the behaviours, values, and skills needed for success in the role. A misaligned job description can lead to costly mismatches.

Solution: Invest time to fully understand the role. Speak with current team members, evaluate past successes and failures, and identify not just the technical skills but also the soft skills and cultural fit needed for success. It’s equally important to understand the dynamic aspects of the role, such as, how it fits within the team structure, the leadership style needed, and how it contributes to organisational goals.

2. Focusing too much on skills and experience

Skills and experience are important, but they don’t tell the full story. Managers often prioritise technical expertise over cultural fit, interpersonal skills, or potential for growth. A technically strong candidate might fail if they clash with the company’s values or team dynamics, and this can be disastrous.

Solution: Don’t just hire based on a checklist. Consider candidates who may not meet every technical requirement but show transferable skills and strong potential for growth., Adaptability and problem solving are critical skills and these traits can be more valuable than technical skills alone. In a tight job market, dismissing applicants who aren’t an exact match for your checklist means missing out on talented individuals eager to learn, while wasting time waiting for a unicorn candidate, who checks all the boxes, but doesn’t exist!

3. Overconfidence in the interview process

Interviews are a must but far from infallible. Candidates who present well in a short, controlled setting might not perform as expected in the real world. If interviewers lack the skills and experience to assess a candidate’s competency or are unable to separate surface level answers from true understanding, it will almost certainly result in poor hiring decisions.

Solution: Use a structured approach where all candidates are assessed against the same criteria. Avoid relying on gut feeling—use data, scoring, and collaboration with your selection team to ensure objectivity. Ensure that those conducting interviews have the experience needed to make informed decisions. In addition, don’t rely on interviews alone to assess a candidate’s suitability.

4. Neglecting comprehensive assessments

Many organisations conduct reference checks, but they often treat them as a formality. It is tempting to try and streamline reference checking process with online tools however be careful as they often don’t allow for probing questions or the nuanced understanding that comes from listening carefully to what a referee says (and doesn’t say).

Solution: When approached thoughtfully, references can provide valuable insights into a candidate’s real-world performance. Tailor your questions to the role and make sure the person conducting the reference check has a good understanding of the role requirements and the team environment. You can also supplement reference checks with other assessments—such as behavioural testing, psychometric evaluations, or work trials—can offer a fuller picture of a candidate’s potential.

5. Failing to prioritise onboarding

Hiring doesn’t end once the offer is accepted Onboarding is critical for helping new hires understand their role, build relationships with their team and integrate into the company culture. Skipping this step not only means the new person is not set up to succeed and is unlikely to get up to speed quickly, but it can also lead to disengagement, confusion, and early turnover.

Solution: Develop a robust onboarding process that helps new hires feel welcome, where they can learn not only the day-to-day aspects of their role but also how their work impacts the larger team and contributes to organisational goals. If you want them to be productive as quickly as possible, integrating them into your team and organisation culture and ensuring they feel supported and valued is a non-negotiable.

Final thoughts

Hiring the right talent is more crucial than ever. While Canberra’s job market shows signs of recovery and growth, businesses must be cautious about repeating the mistakes of the past.

By refining your approach and avoiding common pitfalls, you can improve your chances of making hires that will thrive. A successful hire not only saves money but also boosts morale and sets your business on the path to long-term success.