Each year around this time HR pros write blog posts about the real cost of a bad hire (meaning someone who is ineffective or even destructive to the organization). The latest statistic I read was covered by Lance Haun at TLNT.com. In his post, Lance talks about the meaning behind the numbers in an infographic by Resoomy.com which states that the cost of a bad hire middle manager who makes $62,000 for 2.5 years is actually $840,000. Obviously this calculation is debatable because the statisticians try to account for things like Recruiting, HR, and training costs as well as disruption of business but can’t account for every variable. Most models also account for severance, unemployment insurance, and some level of additional recruiting that must be done to fill the position once the “bad hire” is terminated.
But doesn’t $840,000 seem so arbitrary? There’s a big difference between a “bad hire” who simply doesn’t contribute to the organization and one that either purposely or accidentally dramatically impacts the organization in a negative way. The individual could have a negative attitude and bring down productivity, innovation, and satisfaction in a team. The individual could also be responsible for a massive safety error that costs lives, customers, millions of dollars, brand image, etc.
In my opinion, the difference here is critical thinking. Instead of focusing on the cost of all “bad hires,” could we isolate the cost of poor critical thinkers in the organization? I would much rather spend my time trying to screen out the employee who is prone to making bad decisions than one who is simply an average producer. It seems like the priority would be to make sure you don’t hire a “dangerous thinker” rather than an average thinker.
Someone who lacks critical thinking skills will frequently react emotionally and lack logic in decision making. Poor critical thinkers either make decisions too quickly without analyzing all of the data or delay coming to a conclusion due to lack of confidence. They will either be frozen in the face of unique problems or pursue fruitless solutions to the situation. They will make the same errors repeatedly and not learn from their own mistakes. These are dangerous employees.
What is the cost of that employee? I would argue that it is immeasurable.
Can we instead measure the value of strong critical thinking? If a picture is worth a thousand words, then this picture says a thousand words about the value of effective thinking.
This is Amenah al-Bayati who would have died of a congenital heart defect had the Marines of the 3rd Battalion, 23rd Regiment not used effective thinking to identify, define, and solve the complex problem of getting her medical care in the United States. They faced seemingly insurmountable odds while trying to get a 2 year old child out of Haditha (the most active terror zone in Iraq at the time) for a privately-funded open heart surgery. The entire heroic story is told in the book Now You’re Thinking!, which also details how to follow a critical thinking model and make the most of your own unique thinking style (through taking the My Thinking Styles assessment).
Instead of trying to calculate the cost of a bad hire (or debate about the accuracy of that number), let’s spend our time trying to find employees like those in the Marine Corps Battalion who saved the life of Amenah al-Bayati. Let’s work on hiring critical thinkers.
Did you know critical thinking was rated the NEW #1 workplace skill? Download our paper: 
Right – there’s no way of quantifying what the average or typical bad middle manager costs a company: way too many variables. But it isn’t necessary to quantify the effect in order to take appropriate action. It’s enough to know that the impact can be large, and potentially very large. Similarly, it isn’t necessary to bravely try to quantify the unquantifiable effect of a manager with poor critical thinking skills. We know it can be very large. In the most enlightened business I worked in, we would give prospective employees problems to work on, pre-interview and during interviews (both managers and individual contributors). It was a good way to assess their thinking skills in action, both creative and critical. I’m convinced the process was key to the success of our business.
I think sometimes these huge stats are brought forward simply to “justify” streamlining decisions that have already been put in place. It’s a little easier for one’s conscience to fire or layoff someone if you can tell yourself that they’re costing the organization $840k. It’s an altogether different feeling to lay someone off who is simply contributing 5x their salary to the company’s growth vs. 10x their salary (or whatever). Companies therefore will bring such stats forward and the fired individual is then struggling with not only being laid off, but also the additional kick.
Anywho, I find myself bothered in seeing SOOO many articles on the web right now warning of the typical Christmas & NY layoffs. It would be nice to see companies choose a steadier more optimistic route.
janice