The story of the hire who did not work out is one that business owners love to tell around the campfire (or, more likely, around the conference table). There’s a good chance you’ve heard at least one, if not in person, then definitely on LinkedIn, where such stories are as common as motivational posts and AI promotional videos. Maybe it’s the candidate whose interview was brilliant, but who fell apart three months down the line. Perhaps it was the senior manager whose profile was flawless, but who slowly pulled the entire team off course. These stories are often told with a rueful smile and a laugh that does not convince anyone, because the truth is that the cost of those hires who ‘don’t work out’ is a larger number than most would expect. It stays so well hidden because that single number can be attributed to multiple costs that add up over time.
Three different costs
These costs can often blur together when reflecting on a bad hiring decision. But outlining them separately helps you get a clear picture of how these expensive mistakes impact the organisation.
The first is the recruitment cost. This covers what you spend to find, assess, onboard and train someone, from advertising and recruiter time through to interviews and induction. When a hire does not work out and needs to be replaced, these costs recur.
The second is turnover cost, which is the disruption of the exit and the gap it leaves behind. Whether it’s a bad hire or not, the exit costs the company the handover, the knowledge transfer, and the weeks of reduced output while a replacement gets up to speed.
The third is the cost of poor performance while the wrong person is still in the job. It shows up as missed deadlines, as work that has to be redone, and as the drag on colleagues who quietly cover the shortfall. This cost is frequently the largest of the three.
Inevitably, these costs overlap. The ramp-up period, for example, sits somewhere between recruitment and turnover. So stacking separate estimates on top of each other is time-consuming and fruitless. It is simpler to arrive at one honest total, because a bad hiring decision draws from all three pools in one way or another. It is also why the benchmarks worth using express the whole thing as a single multiple rather than a list of line items.
What the benchmarks say
Reliable India-specific figures are scarcer than the United States numbers that tend to circulate, but the recent ones point the same way. EY’s Future of Pay 2026 puts the cost of losing an employee at roughly twice their annual salary, once you add up hiring, training and lost productivity (EY, 2026). That is a turnover figure rather than a bad-hire figure, and EY does not publish a separate calculation validating the multiplier. Even so, a bad hire is simply turnover you could have avoided, with the cost of the poor performance that ran ahead of the exit stacked on top.
The most directly relevant Indian analysis comes from EY and iMocha, who modelled what a hiring mistake costs using cost to company (CTC). They start with the visible costs of sourcing and interviewing, at around a tenth of annual CTC, then add the mis-hire, the retraining, the salary paid during reduced output and the work that never got done. Take a role on 12 lakh rupees, where the visible cost is about 1.2 lakh. Where the business impact of the role is moderate, their model puts the full cost at roughly 3.4 to 4.3 lakh rupees. Where far more rides on the role, it rises to roughly 6.2 to 8.8 lakh (EY and iMocha, 2024). The gap between those two is not uncertainty in the data. It is the difference between a job where a weak hire is quietly absorbed and one where a weak hire is felt right across the business. These are scenario calculations rather than an observed average, so read them as a way to size the risk rather than as a price tag.
It helps to be honest about what these numbers are and are not. There is no single verified figure for the average cost of a bad hire in India. The international benchmarks you will see quoted are United States figures, useful for a sense of scale but not a direct read on Indian costs. Gallup puts the cost of replacing someone at about 40% of salary for frontline staff, 80% for technical professionals and 200% for leaders and managers (Gallup, 2024). SHRM’s 2025 survey puts the average cost per hire at about $5,475 for a non-executive role (SHRM, 2025). Converting those into rupees would not make them Indian benchmarks. The claim worth making is the measured one. A hiring mistake multiplies the full cost of recruitment, while the idea that every bad hire costs some exact multiple of salary does not survive contact with the evidence.
An illustrative example, not a specific client
To make the scale concrete, here is a deliberately illustrative calculation. Your real figures will be different.
Suppose you hire a manager on 12 lakh rupees a year who turns out to be the wrong fit and leaves at month seven. You have paid for the search and the onboarding, which on the modelling above is a little over a lakh before anything goes wrong. You have also paid roughly seven months of salary, close to 7 lakh rupees, though that is not all waste, because some of the work did get done. What you actually lose is the shortfall between what the role should have delivered and what it did deliver, together with the hours colleagues spent covering the gap. Then you run the search again and wait out a second ramp-up. Added up on cautious assumptions, the cost of this one decision sits in the several-lakh range the modelling points to, not in the tens of thousands most people picture. And a manager sits near the top of that scale rather than the middle of it, because EY and iMocha place managerial roles above both services and sales roles for revenue impact. For a role like this one the figure can approach, and pass, the person’s annual salary.
The exact figure matters less than its shape. The visible costs are the small part.
Why the cost keeps growing
A wrong hiring decision is not just expensive but also risky, because it rarely stops with one mistake. It keeps growing.
Think of a pilot who sets off from Chennai to Delhi one degree off course. At take-off, nothing looks wrong. But if that one degree is carried across the whole route, the plane lands tens of kilometres from where it should. The same applies to a hire who is almost right. In week one the gap is invisible. But by month six it shows up in low-quality output and in a team that works around the problem instead of moving past it.
The longer the wrong decision is ignored, the further off course things drift. That is why the instinct to ‘give it more time’ and ‘hope it improves’ is so often the most expensive instinct of all.
Why good companies still make bad hires
If the cost is this high, you would expect it to be rare, yet it keeps happening even in well-run businesses. Over three decades of hiring, the causes are almost always the same.
The first cause is hiring in a hurry. When a position opens up, pressure mounts to fill it, and a hire who is available immediately beats a better candidate who would need several months to come on board. Speed does matter in recruitment, but speed without rigour is how most bad hires occur.
Another is hiring for skills and paying little attention to anything else. Skills are the easiest to test, and they are one of the least common reasons a hire fails. A companion article, Beyond the CV, will look at what predicts success and how to assess it.
Speed without rigour is how most bad hires occur.
The last cause is having no clear definition of success. If you cannot say what a candidate must achieve in the first year, you cannot figure out what kind of a hire it will take to achieve it. In the end, you won’t be able to tell whether they actually achieved it or not.
Making a better decision
You cannot remove hiring risk, but you can manage it at the decision level, with a few key habits.
Define the role before you define the person. Write down the handful of outcomes this hire has to deliver in the first year. Then hire against those outcomes rather than a wish list of qualifications. That one step heads off a surprisingly large share of bad hires.
Protect your rigour when time is short. Yes, the empty seat does create urgency, but a defined process is what stops that urgency from making the decision for you.
Think hard before you settle for the nearest option. It is tempting to believe that no hire is always cheaper than a bad hire, but a long vacancy carries real costs of its own. The more honest rule to follow is that when a shortlist fails to meet the essential criteria, weigh the cost of carrying the search on against the risk of a poor appointment. If the risk is greater, keep looking.
What it comes down to
A bad hire is rarely one dramatic mistake. It is usually a small gap, somewhere in the brief or the hiring process, that grows over months into a large and expensive problem. The good news is that the same logic runs in reverse. Getting the hiring decision right at the start is one of the cheapest, high-return moves a business can make. Setting the course correctly before take-off is far easier than correcting it in the air.
This is our approach at Eshcol Global. We work with depth rather than volume, and we would rather put forward one person we can stand behind than a stack of maybes.