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Cost of a Bad Hire Calculator

Most bad hire cost estimates you find online quote a single number with no math behind it. This one shows every input, every formula, every source. Built from peer-reviewed utility research (Schmidt & Hunter, 1998) and the Center for American Progress replacement-cost study (2012).

Your inputs

Estimated total cost
$55,744
74% of the annual salary for this role
Replacement cost (recruit and interview)
21% of salary, Boushey & Glynn (2012)
$15,975
Lost productivity during their tenure
6 months at a 30% performance gap, Schmidt & Hunter (1998)
$11,250
Vacancy cost (role sits open)
44 days at daily loaded cost
$15,865
Replacement onboarding ramp
12 weeks at 50% productivity, Allied Workforce (2012)
$8,654
Manager admin time
40 hrs at $100/hr
$4,000

One bad hire costs about $55,744. Structured interviews are twice as predictive of job performance as unstructured ones (Schmidt & Hunter, 1998). Async video interviews enforce structure by design.

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Methodology

Total = replacement cost + lost productivity during tenure + vacancy cost + replacement onboarding ramp + manager admin time.

We use conservative defaults throughout. The widely cited US DoL figure of 30% of first-year salary is a lower bound that matches our replacement and vacancy components alone. Our total runs higher because we include productivity loss during the bad hire's actual tenure, which the DoL figure excludes.

Replacement-cost tiering follows Boushey and Glynn's 2012 analysis for the Center for American Progress: 16% for low-wage, 21% for professional, up to 213% for executive roles. We cap our default at 35% to stay conservative for senior individual contributors.

Sources

  1. Boushey, H. & Glynn, S.J. (2012). There Are Significant Business Costs to Replacing Employees. Center for American Progress.Tiered replacement cost percentages by salary level (16% to 213%).
  2. Schmidt, F. L., & Hunter, J. E. (1998). The validity and utility of selection methods in personnel psychology. Psychological Bulletin, 124(2), 262 to 274.Utility-analysis framework: SDy is about 40% of salary. Basis for the lost-productivity estimate.
  3. US Department of Labor, cited in SHRM 2022 Human Capital Benchmarking Report.Cost of a bad hire is about 30% of first-year earnings, used as a floor for validation.
  4. Gem Talent Acquisition Benchmark Report (2024).Average time-to-hire of 44 days, default vacancy length.
  5. Allied Workforce Mobility Survey (2012).Average 8 to 26 weeks to full productivity, basis for the onboarding ramp loss (50% at 12 weeks).
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