How do you calculate the cost of a bad hire?

You calculate the cost of a bad hire by considering their salary, how long it takes to fill the position, the hours spent screening and interviewing candidates, the cost of job advertisements, background checks, and drug screening, as well as the cost of lost productivity and the time spent onboarding and training the new employee.

The short-hand version of all these calculations is to just take the average cost of a bad hire, which works out to around 30% of an employees annual salary. So if you make a bad hire for a person with an annual salary of $100,000, that will cost your company about $30,000.