Cost of a Bad Hire Calculator
A bad hire rarely costs just their salary. Add what you spent recruiting them, the pay that bought work they didn't deliver, the cost of exiting them, and hiring again — and a mis-hire in India typically runs 30–150% of first-year pay. A mid-level ₹13 LPA hire who leaves at six months works out to roughly ₹9.3 lakh. Enter your numbers below.
The mis-hire
= ₹13,00,000
What this bad hire cost
₹9.3 L
≈ 72% of first-year CTC
- Recruitment (sunk)
- ₹1.6 L
- Salary for underperformance
- ₹3.9 L
- Exit — notice & severance
- ₹2.2 L
- Replacement hire
- ₹1.6 L
₹1,08,333/mo CTC · 6 mo at ~40% productivity · 2 mo exit · recruitment counted twice (hire + replace).
The productivity figure is a judgement input — no India-primary bad-hire study exists, so the defaults follow US HR research (SHRM, US Dept. of Labor: 30–150% of first-year pay). Recruitment fees, notice and severance use India-primary figures.
How the cost of a bad hire is calculated
Rather than one blunt "X% of salary" figure, the calculator adds up four real costs you actually pay:
Total = recruitment + salary for undelivered output
+ exit (notice & severance) + replacement recruitment
- 1Recruitment — the agency / sourcing fee you paid to hire them (8–25% of CTC by seniority, India).
- 2Underperformance — monthly CTC × months in role × the share of output they didn't deliver.
- 3Exit — notice-period pay plus statutory severance (about 1–3 months of CTC).
- 4Replacement — the recruitment fee again to hire someone new. Sum the four → total cost.
- The recruitment fee is counted twice — once for the mis-hire and once to replace them, because you run the search all over again.
- The empty seat while you re-hire is deliberately left out here — that's a separate number, the Cost of Vacancy, so the two tools don't double-count.
The productivity figure is a judgement input — no India-primary bad-hire study exists, so the defaults follow US HR research (SHRM, US Dept. of Labor: 30–150% of first-year pay). Recruitment fees, notice and severance use India-primary figures.
A worked example
Suppose a mid-level hire on ₹13 LPA leaves after 6 months, delivered about 40% of what the role needed, and cost a 12.5% agency fee:
- • Recruitment (sunk): ₹13,00,000 × 12.5% = ₹1.6 lakh
- • Underperformance: ₹1,08,333/mo × 6 × 60% = ₹3.9 lakh
- • Exit (≈2 months notice + severance): ₹2.2 lakh
- • Replacement recruitment: ₹1.6 lakh
- • Total: ₹9.3 lakh — about 72% of first-year pay
And that's before the empty seat while you re-hire, plus the harder-to-count costs — team morale, lost customers, and your own time — which this calculator leaves out to stay conservative.
Frequently asked questions
How much does a bad hire cost in India?▾
A bad hire typically costs 30–150% of the role's first-year salary once you add what you spent recruiting them, the salary paid while they underperformed, the cost of exiting them, and recruiting a replacement. For a mid-level role on ₹13 lakh that often works out to ₹8–10 lakh; senior roles run higher.
What makes up the cost of a bad hire?▾
Four things: (1) the recruitment fee spent hiring the wrong person, (2) salary paid for output they didn't deliver while employed, (3) the cost of exiting them — notice pay and statutory severance, and (4) recruiting a replacement. This calculator adds them up. The replacement's ramp-up and the empty seat are counted separately in the Cost of Vacancy calculator, so the two tools don't double-count.
Is a bad hire really just 30% of salary?▾
30% of first-year salary is the widely-cited US Department of Labor floor — the minimum. SHRM and most HR research put mid and senior mis-hires at 100–150% of salary once underperformance, exit, and replacement are included. The real figure depends on how long they stayed and how far below expectations they were.
How is the cost of a bad hire different from cost of vacancy?▾
Cost of vacancy is what you lose while a seat is empty. Cost of a bad hire is what you lose when the seat is filled by the wrong person — you pay full salary for partial output, then pay again to exit and replace them. They are separate numbers, and many teams pay both on the same role.
How do you reduce the cost of a bad hire?▾
Assess for the competencies the role actually needs before you make the offer, not résumé keywords. Structured, scored assessment of how a candidate performs the real work is the cheapest insurance against a mis-hire — the cost of one bad hire usually dwarfs the cost of assessing every candidate properly.
Methodology & sources
Recruitment fees (8–25% of CTC): India agency benchmarks by seniority (India-primary).
Notice & severance: Indian employment law — notice periods (probation to 90 days) plus statutory severance under the Industrial Disputes Act (India-primary).
Salary defaults: representative India national salary benchmarks (2025-26) — editable, and they vary by sector and seniority.
Productivity / bad-hire cost: a US HR research benchmark (SHRM, US Dept. of Labor — a bad hire costs 30–150% of first-year pay), applied in the India context. No India-specific study has been independently published, so treat the productivity figure as directional and adjust it to your case.
The cheapest insurance against a bad hire is a better hiring signal
Kaairo scores candidates on real competencies — how they actually do the work, not keywords — so you catch the wrong hire before the offer, not six months after.