04-01-2026IMPACT COUNCIL

The hidden budget line destroying your bottom line

Bad hiring decisions are quietly costing companies millions because most leadership teams are measuring hiring speed, not hiring accuracy.

[Photo: Getty Images]

The Fast Company Impact Council is an invitation-only membership community of top leaders and experts who pay dues for access to peer learning, thought leadership, and more.

There is a budget line in your business that no one is managing. According to research by Leadership IQ, confirmed across multiple subsequent studies, the average 18-month failure rate across industries is 46%—meaning nearly one in two hires either underperforms significantly or leaves within 18 months. The cost of each of those failures runs between 50% and 200% of that employee’s annual salary, accounting for recruiting costs, onboarding investment, lost productivity, team disruption, and replacement.

Run the math. A company making 50 hires a year at average fully-loaded salaries of $95,000—not a large organization, just a growing one—is sitting on a financial exposure somewhere between $1.1 million and $4.4 million annually. Not from a failed product launch or a bad acquisition. But from screening decisions made with confidently unreliable information.

Most executive teams have no visibility into this number. It doesn’t show up cleanly on a P&L. It bleeds out across departments—in manager time absorbed by struggling new hires, in team productivity lost during extended onboarding, in recruiting costs paid twice when a role has to be refilled. The bill arrives in installments, which makes it easy to miss. But it is very much being paid.

YOU’RE MEASURING........

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