Bad hire ≠ turnover. A bad hire is the wrong person hired (mis-hire, poor fit, underperformance, sometimes toxicity), distinct from turnover (a good person leaves). The cost structures overlap but differ: a bad hire layers on wasted compensation during tenure, severance/termination, re-recruitment, and contagion costs (morale, lost productivity of the team, the management time sunk into supervising a poor performer) on top of the standard replacement cost.

The “DOL 30%” claim — flag it. The single most repeated bad-hire statistic is “the U.S. Department of Labor estimates the average cost of a bad hire equals 30% of first-year earnings,” usually cited as “U.S. Department of Labor, 2003.” This attribution cannot be traced to any primary DOL or Bureau of Labor Statistics publication. A dedicated source trace found that across dozens of secondary sources, not one links to, names, or quotes an actual DOL document, report title, or URL; a direct search of dol.gov returns no such figure. The cleanest documentation of this is an EASI·Consult article by Rebekah Cardenas (2014), which itself describes the figure as something propagated by “blogs that cite other blogs.” The “2003” and the more recent “2023” datings are both unsupported by any locatable DOL document. Conclusion: treat the DOL 30% figure as recycled/apocryphal and do not present it as established fact. If a 30%-of-salary planning number is used, anchor it instead to the traceable CAP synthesis (16–21% typical) or label it as a convention.

The vendor/survey figures (report, but label). The most-cited concrete number is CareerBuilder’s: companies reported losing an average of US$14,900 per bad hire, with 74% of employers admitting to a bad hire. This is a vendor survey — conducted online by Harris Poll, Aug 16–Sep 15 2017, among 2,257 hiring/HR managers and 3,697 workers; self-reported and proprietary in method. A 2013 CareerBuilder survey (6,000 respondents) found 27% of affected employers said a single bad hire cost more than $50,000. Robert Half’s CFO surveys add useful texture but are likewise vendor surveys: CFOs ranked the biggest impact of a bad hire as lower staff morale (39%) and lost productivity (34%) ahead of monetary cost (25%); a separate Robert Half survey found managers spend ~17% of their time (roughly a day a week) supervising poor performers; and Robert Half Canada reported 41% of Canadian hiring managers made a regrettable hire (up from 17% in late 2022). These are directional, not measured costs.

Why senior bad hires are disproportionately worse — the rigorous reason. The peer-reviewed justification is O’Boyle & Aguinis (2012, Personnel Psychology), who analyzed 198 samples totalling 633,263 individuals and showed that individual performance follows a power-law (Paretian) distribution, not a normal (bell) curve — a small number of top performers account for a disproportionate share of output. The practical implication: in senior, specialized, and revenue-attached roles, the gap between a great hire and a bad hire is enormous and non-linear, so the expected value of getting a senior hire right (and the cost of getting it wrong) dwarfs that of a typical role. This is the evidence base that justifies investing in rigorous senior selection (and in retained executive search). For a K-W SMB, one bad VP or controller can stall a function for a year — comfortably into the “multiple-times-salary” territory that the Rule of Three captures.

Ontario/SMB lens. Canadian termination economics matter: a bad hire who must be let go triggers ESA notice/severance obligations and potential wrongful-dismissal exposure, which raises the hard cost of correcting a mis-hire relative to the U.S. at-will baseline. This strengthens the case for front-loaded screening rigor. Confidence: directional, given survey-heavy inputs and the untraceable DOL anchor.

Anchor: Saints and Vampires + Executive search pillar. Links to Note 1 (turnover cost) and Note 6 (search fees).