Why the intuitive calculation is always too low
Salary is the only part of the loss visible in the accounts. Everything else stays hidden: a manager's time does not appear in reporting, lost deals cannot be measured after the fact, and a drop in team motivation is not measured in money at all.
That is why a hiring mistake feels like a minor annoyance, when in fact it is one of the most expensive operational errors in small and medium business. According to HR research, a bad hire costs a company between 3 and 5 annual salaries for management positions and 3–4 monthly salaries for frontline staff.
A concrete example
Take a situation typical for Almaty: you hire a sales manager on a salary of 400,000 ₸. They work for 3 months, do not reach target, and you part ways. Let us count everything the company actually lost.
| Loss item | How we count it | Amount, ₸ |
|---|---|---|
| Salary for 3 months | 400,000 × 3 | 1,200,000 |
| Employer contributions | roughly 15–20% on top of salary | ~210,000 |
| Time spent recruiting | CV database access, job ads, ~25 hours of the manager's time on screening and interviews | ~250,000 |
| Onboarding | ~20 hours of manager and mentor time: training, product, CRM, deal support | ~200,000 |
| Lost revenue | target 3M ₸/month, ~35% achieved over 3 months; gross margin taken at 20% | ~1,170,000 |
| Repeat recruitment | everything again: search, interviews, onboarding once more | ~450,000 |
| Total | — | ~3,480,000 |
Almost 3.5 million tenge on a salary of 400,000. That is 8.7 monthly salaries, not three as it first appeared. And this is still a conservative calculation: we did not include clients the manager handled and lost, nor the time the manager did not spend on other work.
An important detail. The largest line here is not salary but lost revenue. This is precisely why a mistake in a revenue-generating role (sales, production) costs many times more than a mistake in a support role on the same salary.
A formula you can apply to your own vacancy
To avoid calculating from scratch every time, use a simple scheme. Take your position and substitute your figures:
- Direct payments = salary × months worked × 1.2 (including contributions)
- Cost of recruiting = hours of everyone involved × their hourly rate + spending on job platforms
- Cost of onboarding = hours of manager and mentor × their hourly rate
- Lost opportunity = (target − actual) × margin, or the cost of the function standing idle
- Repeat recruitment = points 2 and 3 all over again
Calculate the manager's hourly rate from their own income: salary ÷ 168 hours. If a director earns 1,500,000 ₸, an hour of their time costs about 9,000 ₸ — and 25 hours of interviews turn into 225,000 ₸ that nobody noticed.
What costs most in different types of role
| Type of role | Main loss driver | Typical loss |
|---|---|---|
| Sales | lost revenue | 6–10 salaries |
| Manager | poor decisions and team demotivation | up to 12 salaries and above |
| Accountant, HR administrator | reporting errors, risk of penalties | 4–8 salaries + possible sanctions |
| Frontline staff | cost of repeat recruitment and training | 3–4 salaries |
| IT specialist | missed product deadlines | 6–12 salaries |
The practical conclusion: it makes sense to economise on hiring quality only where a mistake is cheap. In roles where an error costs 8–12 salaries, saving on recruitment almost always turns into a loss many times larger than the saving.
Where hiring actually breaks down
Over 15 years of work I see the same four points where a future mistake is born. All of them happen before the candidate starts work.
1. The task is framed as a list of skills rather than a result
"We need a manager with three or more years of experience" is not a task. A task sounds like this: "we need someone who within six months will bring repeat sales from the existing client base up to 40% of revenue." Hundreds of people fit the first description, dozens fit the second — and they are entirely different people.
2. The decision is made on likeability at interview
A candidate who speaks well seems like a good employee. The correlation between these two things is far weaker than commonly assumed. Without testing actual working skills, an interview primarily measures the ability to perform at interviews.
3. References are not checked
One call to a previous manager takes 15 minutes and filters out a significant share of problem cases. This is the step most often skipped — precisely because the vacancy is urgent.
4. Haste driven by an urgent vacancy
The most expensive motive in hiring is "we needed someone urgently." That is exactly when standards drop, and two months later the company starts recruiting again, having lost both money and time.
A case from practice
A manufacturing company in Almaty was looking for a chief accountant. The candidate made an excellent impression: confident delivery, relevant experience, readiness to start immediately. They decided not to check references — the vacancy had been open for three months and everyone was tired.
Five months later it emerged that part of the reporting had been filed with errors, and restoring the records required bringing in an external specialist. To the direct losses — five salaries plus the cost of restoration — were added the finance director's time and repeat recruitment. The total exceeded 6 million tenge.
One call to the previous employer, which would have taken fifteen minutes, would have shown that the person had left two companies in a row for similar reasons.
What happens to the team
This is a separate category of loss that cannot be expressed in figures but which every manager feels. When someone joins a department and cannot handle the work, several things happen at once.
Colleagues start finishing work for them — at first out of politeness, later with irritation. The manager spends time reviewing errors instead of developing the area. Strong employees, seeing that weak work is tolerated, draw conclusions about the company's standards. And when the person finally leaves, those remaining take on their tasks as additional load — and some of them start looking at the market.
This is exactly why a second mistake in a row on the same position costs more than the first: the team is already tired, trust in the hiring process is undermined, and the next newcomer is met with suspicion.
When losses can be recovered and when they cannot
Not every hiring failure is a disaster. It helps to distinguish three situations:
| Situation | What to do | Recoverability of losses |
|---|---|---|
| Mistake spotted in the first month | Part ways quickly, without waiting for the end of probation | Losses are minimal, most is recovered |
| The person is capable but lacks a skill | Training and a mentor — often cheaper than recruiting again | The investment pays off if motivation is there |
| Mismatch in values and attitude to work | Part ways — training does not fix this | Losses are unrecoverable, do not delay |
The most expensive strategy is hoping someone will "settle in" when by the second month it is clear they will not. Every additional month of waiting adds a full set of costs to the bill: salary, contributions, the manager's time and lost opportunity.
What to do before your next hire
- Use the formula above to calculate the cost of a mistake for your specific vacancy — that single figure changes how you approach selection
- Describe the result you expect after 3, 6 and 12 months in measurable terms
- Add a practical task to your selection process, close to the real work
- Build in a mandatory call to two previous managers
- Write a plan for the first 90 days before the person starts — most departures happen precisely in this period
- Make an agreement with yourself: if there is no suitable candidate, you do not hire "just anyone"
In brief
A bad hire is not the salary you spent but the sum of six components, the largest of which is usually lost revenue. For a sales manager on 400,000 ₸ the real loss approaches 3.5 million tenge. It is useful to calculate this figure before hiring rather than after: it shows clearly how much it is reasonable to invest in quality selection.