A bad hire costs you more than you think

Many times, when I discuss the cost of a bad hire with my irrigation and lighting clients, they look at me with complete bewilderment. It’s as if they are realizing — for the first time — that hiring the wrong people has literally cost them thousands of dollars off their bottom line.

In the past, far too many business owners simply accepted that losing a certain percentage of new hires each year was normal. Unfortunately, that assumption has a very real price. Because they never took the time to calculate what those failed hires cost them, they missed opportunities to stop thousands of dollars from going straight out the door.

No business, especially a small business, can afford to waste the time of their hiring team and the company’s financial resources on a shoddy hiring strategy.

Hiring a new employee often looks simple on the surface: Post a job, interview candidates and make an offer. But the financial impact goes far beyond the salary listed on that offer letter. For small and medium-sized businesses, especially in the green industry, understanding the full cost of a new hire is essential for hiring strategically and protecting profit margins.

Recruitment and hiring expenses

The first financial layer comes from recruitment. The cost of posting ads, using hiring platforms and working with recruiters can add up quickly. Small businesses commonly spend several thousand dollars just attracting qualified candidates.

That doesn’t include time spent by managers reviewing résumés, conducting interviews or completing background checks — hours that translate directly into labor cost.

To help clients avoid hiring mistakes, I recommend using the TriMetrix EQ assessment to better qualify final candidates. This tool helps identify behavioral style, motivators and emotional intelligence — three areas that dramatically impact performance and long-term fit.

Onboarding and training costs

Once a candidate accepts an offer, the next set of expenses begins. Training programs, materials, software licenses, job certification classes and onboarding tools carry a financial cost.

But there is also a hidden cost: lost productivity while the new hire is learning the ropes.

Research shows it can take six months to a year for a new hire to reach full productivity — especially in specialized technical roles.

During that time, your experienced employees dedicate hours to mentoring and supervision, which further increases indirect costs. This is why a structured, organized onboarding process is essential.

I once worked with a green industry client who complained about how hard it was to find good employees.

When I asked whether they trained new hires, he admitted they were “too busy” to provide formal training. New recruits received a few quick instructions, and that was it.

He soon discovered what many owners eventually learn: He didn’t have enough time not to train his new employees.

Two additional consequences often go unnoticed:

1. Untrained employees quickly develop a poor attitude toward their job. When people feel incompetent at what they’re doing, they’re far less likely to enjoy it. Job dissatisfaction is one of the top contributors to high turnover.
2. A poor onboarding process frustrates your existing team. Your employees notice when new hires are unprepared. Their jobs become harder, resentment builds and team morale takes a hit. It’s a ripple effect that hurts productivity and retention.

“No business, especially a small business, can afford to waste the time of their hiring team and the company’s financial resources on a shoddy hiring strategy.”

Employee benefits and overhead

Salary is only part of what you pay for a new hire. Benefits — health insurance, retirement contributions, paid time off and other perks — can raise total compensation by 20% to 40% or more.

Add workspace, equipment, uniforms, vehicles, tools, software and utilities, and the cost continues to grow.

The high cost of turnover

Perhaps the most overlooked expense is turnover. If a new employee leaves within the first year, you have to start the process all over again.

Estimates show that replacing an employee can cost between 50% and 200% of their annual salary, depending on the role.

High turnover doesn’t just drain finances — it also damages customer relationships and team morale.

Mitigating the costs

You can reduce the cost of hiring by:

1. Improving hiring accuracy.
2. Using validated assessment tools.
3. Implementing a structured onboarding process.
4. Training consistently and intentionally.
5. Building a workplace culture where people want to stay.

Thorough interviews, evaluating soft skills and pairing new hires with mentors can help them integrate faster and contribute sooner.

Final thoughts

The true cost of a new hire extends well beyond their paycheck. Recruitment, training, benefits, overhead, turnover and the impact on the rest of your team all shape the financial picture.

When you clearly understand these costs, you can make smarter hiring decisions, protect your bottom line, and set new employees up for long-term success in your irrigation and lighting business.

Tom Borg is the founder and president of Tom Borg Consulting LLC. Since 1996, he has worked with CEOs, presidents and leadership teams in over 450 companies and organizations. Through his consulting, mentoring, coaching, workshops and assessment instruments, he works with green industry clients at the intersection of leadership, communication and culture, assisting them in building a culture of engagement and teamwork. You can contact him at 734.812.0526 or tom@tomborg.com, or visit his website at tomborgconsulting.com.