The Real Cost of Making Bad Hiring Decisions

In this blog, you will learn:

• The real cost of making bad hiring decisions.
• How to avoid making bad hiring decisions.
• More about our accountancy recruitment services to help you hire the best talent for your practice.

Building a strong team is crucial for business growth, and hiring the right talent is essential to success. Over the course of your career, you might be required to hire for the business and it’s essential to recruit the best possible talent - no one wants to be responsible for making a bad hiring decision.

When accountancy practices make the wrong hiring decisions, it can have long-lasting effects across multiple areas of the business. Data from leadership training experts, Leadership IQ found that a whopping 46% of hires turn out to be bad hires within 18 months. So, how can your accountancy practice ensure it doesn’t make the same mistake?

In this blog, we’re delving into the real cost of bad hiring decisions and how to avoid picking the wrong person for the job.

How much do bad hiring decisions cost a business?

There are many hidden costs and operational setbacks that come with hiring the wrong person for your practice. The impact of a mis-hire goes far beyond financial losses as it can have non-monetary implications and contribute to high employee turnover.

The costs of bad hiring decisions for an accountancy practice include:

• Financial losses.
• Reduced productivity.
• Negative impact on employee morale.

Financial losses

The most obvious and often the most impactful cost of a bad hire is financial. According to the Recruitment and Employment Confederation (REC), a bad hire can cost a business three to four times the employee’s annual salary. For example, in the UK, a poor hiring decision for a role with an annual salary of £42,000 can end up costing a company up to £132,000!

From the onboarding and training costs, to severance pay and the cost of rehiring, accountancy practices pay the financial consequences of bad hiring. A bad hire means money wasted on multiple factors including resources, agency fees, cost of job posting, training and retraining, as well as additional costs on top of this such as wasted salary, compensation and loss of business.

Reduced productivity

It only takes one bad hire to affect an entire department and as a result of this, the whole workplace can be thrown off balance. According to a study by the REC, a bad hire can reduce team productivity by up to 40%. It can also lead to other non-monetary losses like wasted valuable company time which can affect the business’s professional reputation and revenue.

If the new hire is unable to perform effectively and their workload needs to be redone or corrected, projects can be delayed and deadlines may be missed. An underperforming employee can disrupt workflows and day-to-day operations which can slow down processes and potentially result in the accountancy practice losing business. 

If the wrong hire is in a management role, poor leadership can lead to even higher disengagement and substantial productivity losses. An accountancy professional within a leadership position is expected to set an example for the rest of the team and if they are unable to perform in their role, it could have a knock-on effect to the productivity and performance of the rest of the team. 

Negative impact on employee morale

Beyond financial loss and productivity setbacks, bad hiring decisions can significantly impact employee morale, collaboration and the dynamics of the business.

Bad hiring decisions can negatively impact attitudes and overall energy as poor hires may require constant supervision. Some tasks may need to be redone, corrected or delegated to other team members due to an increase in errors, lack of trust and the need for efficiency.

This disruption to team structure can cause additional stress for colleagues who may end up facing a heavier workload and the pressure to compensate for the underperformance of others. Team members may also end up investing their own time into training someone who has no future with the company. This diverts their attention away from their own tasks, can derail team dynamics and might cause tension in the workplace.

How to avoid making bad hiring decisions

How to avoid making bad hiring decisions:

• Don't rush the process.
• Reinforce your brand.
• Consider cultural fit.
• Focus on onboarding and training.
• Think outside of the box.

Don’t rush the process

It’s crucial that employers take the time to find the best possible talent for their practice. Tight deadlines, pressure and workloads often lead to employers rushing and skipping crucial steps in the recruitment process.

You want your job advert to stand out and actually work, which is why it’s important for employers to prepare and put in the extra effort to find the best talent. Implement efficient interview processes, maintain timely communication and provide updates to complete the recruitment process without missing out any essential steps.

Ultimately preparing and researching can attract a good team member which will in turn improve your productivity and ensure your practice is a financial success.

Reinforce your brand

A company's brand, particularly its employer brand, significantly impacts how candidates view and apply for jobs. According to Leadership IQ data, only 39% of companies say their recruiting process represents their employer brand.

Candidates will research accountancy practices before applying for the job to get an indication of the company culture, values and work environment. Companies should be transparent about their values and mission, ensuring their communication aligns with their overall brand message.

A positive employer brand can make a company appear like a desirable place to work and therefore attract more high-quality applications. A weak or negative brand can deter top talent including qualified candidates and increase the risk of poor hiring decisions.

Consider cultural fit

Finding employees that are a good cultural fit is crucial to the success of a business and team morale. Even if a candidate checks all the boxes to do the job on paper, it's crucial they align with your company culture; even the most qualified hire can still be the wrong fit if their values and work style don’t align with your business.

Candidates are drawn to companies that align with their own values. When someone doesn't fit within the company culture, it can cause tension, disrupt productivity and affect employee experience and satisfaction, which can cost the company valuable time and money.

Focus on onboarding and training

Sometimes, an employee just isn’t the right fit, but even a great hire can fail without the right support. Onboarding and training can make a significant difference to an employee's success and progression within your practice. 

Ensure a seamless onboarding process for new hires by providing clear role expectations, company culture integration and leave ample time for questions and feedback. If you hire someone who needs more experience or training, invest the time, money and resources to accelerate learning for staff and close the skills gap. You never know, with the right support, a good hire might end up being the strongest member of your team.

Optimising your onboarding process could mean the difference between a good and a bad hire which will greatly benefit your practice.

Focus on seamless onboarding and continuous training to build confidence, boost engagement and reduce early turnover.

Think outside of the box

It’s important to not just rely on CVs to determine a person’s suitability for a role. A CV is important but it doesn’t always reflect a candidate’s suitability for the role or whether they will be a good company culture. It’s important to look beyond the experience, skills and achievements of an individual and to consider other professionals who, with consideration and the right training, could be a great hire for your accountancy practice.

Think outside of the box and look beyond obvious candidates who are actively job hunting - just because they appear to be the perfect candidate on the surface, doesn’t automatically mean they will be a good hire. 

To avoid making bad hiring decisions, it would be prudent to expand your outlook and tap into the hidden accounting talent pool. There is a lot of hidden talent and underrepresented individuals with the skills and the potential to be great in your accountancy practice. Network, use social media and referral schemes to find great individuals including graduates and professionals returning to work after a career break.

Accountancy recruitment services

As specialist accountancy recruiters, we support practices nationwide with their permanent recruitment needs. 

Whether you’re searching for a tax, audit or payroll specialist, we will help you to find whoever you need to make your practice thrive.

If you’re struggling to fill a vacancy, why not get in touch with Management Consultant Lauren Bailey on 01772 954200 to see how we can help?

Accountancy jobs

If you’re searching for your next accountancy job, why not take a look at the latest vacancies, or simply upload your CV to be notified when a relevant position becomes available. 

Meet Lauren Bailey 

Who is Spencer Clarke Group?

Established in 2017, we’re an award winning and progressive recruitment agency based in the heart of the North West. Our reputation is built on trust, expertise and an unwavering commitment to exceed expectations. 

In 2024, we were named Recruitment Agency of the Year at the prestigious Recruiter Awards, an accolade we are extremely proud of. 

We operate in two sectors:

Private Sector

Public Sector 

In eleven specialisms:

Accountancy & Finance

Education & SEND

Construction, Trades & Labour

Healthcare, Social Care & Nursing

Housing

Corporate Functions & Business Support

HR & Workforce Development

IT & Digital

Property & Asset Management  

Planning, Development & Regeneration 

Highways, Infrastructure & Engineering