Three people discuss some hand-drawn wireframes in what seems like it could be an interview setting.

The Hidden Costs of Missing a Good Hire

In Management, Programming, Technology by Pete

The vast majority of hiring processes in tech are premised on the fact that they’d rather hire nobody than make a single bad hire. The rationale for this is often that the cost of a bad hire is far bigger than the cost of missing on a good candidate.

This is pure conjecture. Any blanket statement about these relative costs is a clear indication that the person making it hasn’t really thought very hard about it. Every team has different risks and opportunities.

There’s been a lot written about the cost of a bad hire, but let’s look at the costs of missing on a good one.

The Obvious Costs

Missing on a good hire tends to have obvious direct costs and opportunity costs. The direct costs are simple. How many more people do you have to interview to fill a role if you pass on a good candidate? How much does that cost?

Opportunity costs are harder, largely guesswork, and easy to minimize. That said, your product team has probably put together a case for why the project that this new hire will enable is critical and has high value. It’s sometimes possible to work backwards from this to an estimated impact to the business. Typically, though, this number is also not massive (and it’s probably exaggerated, in any case).

The Hidden Costs

If your hiring process prioritizes No Bad Hires, it is probably biased towards people who share demographics or backgrounds of your existing team. The people you’re passing on are much more likely to bring step-function increases in capability or productivity to your team than more of the same.

The synergy of this practice and in-group bias and is one reason companies struggle to stop hiring white dude after white dude. The more people from over-represented groups you hire, the less likely others will be to want to work for you, making it even harder to hire quickly and well.

Finally, it’s impossible to quantify what a person might have brought to your company if only you’d hired them.

Maybe they’d have had a trajectory-shifting idea. Maybe they’d revolutionize your internal processes. Maybe they’d give you access to a network you’d never have otherwise.

The down-side of missing a great hire is low in the best case but nearly unbounded in the worst case.

Should You Target Zero Bad Hires?

Probably not.

You’ll make hiring mistakes. If you do a lot of hiring never make a bad hire, that means your mistakes are all good candidates you’ve missed.

Instead, trim down your list of “required” qualifications to the bare minimum. Consider hiring for potential and attitude1. Improve your on-boarding and training (this will help everyone), and start expanding the pool of candidates who you consider a good fit

You’ll wind up with a more vibrant team and it’ll be easier to hire them: win/win.

  1. This is a courtesy often extended to white dudes from traditional backgrounds. Making the conscious decision to do this will force you to consider it in places you otherwise wouldn’t have, reducing the unconscious bias in your processes.