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The most obvious penalty for a hiring error is a need to correct that mistake once it is obvious it is not a good fit. Frequently overlooked is the influence of hiring error your management team.
Some team members will be insulted when they see an inferior manager moved to an important job. When team members feel that they have not been recognized and that mediocre people have been promoted, productivity will suffer. Furthermore, some people will leave because they are frustrated by their inability to advance, and they will discover that they have better prospects elsewhere.
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