The UK job market is in a precarious situation right now. Despite rising wages and low unemployment, businesses are still having trouble finding the right candidates. With unemployment figures slowly rising and a prolonged cooling of the labour market in sight, it seems things will get worse before they get better.

The Hidden Costs of a Bad Hire in the UK Job Market

The fact of the matter is that there are just too few workers out there at the moment. That figure could be as high as a million, and businesses are desperate to hire anyone to plug the gap. 

Of course, when recruitment is rushed or poorly planned, mistakes are made, and the wrong people get hired simply to have bodies in seats. After all, having someone is better than having no one, right?

Sadly, the answer is a resounding ‘no’. The cost of a bad hire is high, and it’s of great concern to business leaders, with more than half saying bad hires are the greatest challenge they’re facing today.

What is a bad hire?

A bad hire can be anything from a mild inconvenience to a major disaster. They are typically an employee who does not perform their job well or who is not a good fit for the company culture. This can manifest in several ways:

  • They have the wrong skills or experience for the job
  • They are not able to meet the expectations of their role
  • They have a negative attitude or do not fit in with the company culture
  • They are frequently late or absent
  • They make a lot of mistakes
  • They are not able to work independently or as part of a team
  • They are disruptive or cause conflict in the workplace

What is the cost of a bad hire?

When a business hires a mismatched candidate, the costs are great indeed. First, the new hire might simply not work out, necessitating a replacement. This will involve another lengthy and expensive recruitment drive. 

Beyond direct costs, there are things that can’t be measured so easily. These hidden costs can include:

  • Lost productivity: A bad hire will often be less productive than other employees, which can lead to lost revenue for the business
  • Damage to morale: The wrong candidate can create a negative work environment, which can damage morale and productivity
  • Damage to reputation: A bad hire can damage the company's reputation, making it more difficult to attract and retain customers and employees
  • Legal costs: In rare cases, a bad hire can lead to legal action, such as a discrimination lawsuit

The estimated cost of all this can be as high as three times the salary paid. In the UK, the estimated fee facing SMEs for three bad hires a year is £57,000. That’s a fee that many small businesses simply cannot afford. What’s worse, 60% of new hires worldwide are not working out to some degree. Is there anything that businesses can do to make sure they’re not making these costly mistakes in the recruitment process?

Avoid bad hires with reference checks

Once you’ve made sure you’re not making some of the classic recruitment mistakes, such as complicated job descriptions and rigid requirements, it’s time to take a look at your reference checking.

Reference checking is the cheapest and easiest way to gain an in-depth analysis of a candidate from trusted sources. Checking references goes beyond just making sure that a candidate is telling the truth; it’s also a great way to build a complete picture of their background and uncover any hidden gems in their history.

Reference checking also avoids the need for potentially costly litigation that can occur when a candidate is terminated. By thoroughly scrutinising a candidate's background and verifying their qualifications, this can help employers make judicious hiring decisions.

Although incredibly useful, reference checks can be a timely affair and prone to error. That’s why many employers are now investing in automated reference-checking software. In the past, it could take weeks to chase up references, but now they come back in less than 36 hours. 

Competency scoring is a great way to compare candidates across the board and find which one would make the perfect fit for an organisation, and asking questions that are tailored to each candidate is a crucial part of this step. Reference-checking platforms like RefNow can create customised question templates that can easily be applied on a candidate-by-candidate basis, saving time and ensuring greater accuracy. 

Sidenote: There’s a common misconception about reference checking that the performance lies solely in the questions asked. This simply isn’t true, and we’ll be detailing why in a future blog post.

Ultimately, the power of reference checks lies in their power to validate claims and ensure an ideal fit for an organisation, saving precious time and resources.


As we’ve seen, the cost of a bad hire can be, at best, a nuisance and, at worst, catastrophic. However, with better hiring procedures in place, such as an impeccable reference checking system, a business’s chance of finding the right person for the right job skyrockets. RefNow’s automated reference-checking software is the ideal solution.

RefNow completely transforms HR by streamlining the recruitment process. It drastically speeds up time-to-hire, allowing for much faster hiring decisions. RefNow’s advanced automation abilities ensure consistency and accuracy, meaning no more mistakes, and the compliance burden becomes a thing of the past.

If you would like to learn more about how RefNow's automated Employment Referencing software can help your organisation, reach out to us today and get your first 5 checks free.