Hiring for Culture, Not Just Competence: The Hidden Costs of a Bad Hire

Hiring is one of the most important—and riskiest—things a founder can do.

Early on, you’re desperate for good people. You need skills, experience, and execution. But as the company scales, something even more important emerges: culture fit.

I learned this firsthand at a number of my start-ups, but for obvious reasons I won’t name any in particualr. In the early days, hiring was about filling roles fast. But as we grew, I saw how one bad hire—someone who looked great on paper but didn’t fit our culture—could erode morale, disrupt teams, and even cost us money.

At Founded Partners, we see founders make this mistake all the time. They focus on resumes, hard skills, and past experience but overlook whether the person actually fits into their company culture. And when the culture fit is wrong, the whole company feels it.

So how do you avoid this? Let’s break it down.

The Hidden Costs of a Bad Hire

A bad hire is expensive—not just in salary but in time, energy, and cultural damage. Studies show that replacing an employee can cost up to 2x their salary, but the real cost is deeper than that.

Here’s what happens when you hire someone who doesn’t fit your culture:

Team Morale Drops – If one person doesn’t align with your values, it creates friction. Other employees lose motivation, resent leadership, and sometimes leave.

Productivity Suffers – A bad cultural fit leads to communication breakdowns, lack of trust, and slower execution. High-performers end up spending time managing interpersonal issues instead of focusing on their work.

Leaders Waste Time – Instead of scaling the company, founders and managers get stuck micromanaging or constantly fixing issues caused by the misalignment.

Customers Feel It – If employees don’t believe in the company’s mission, neither will your customers. Culture misalignment at the team level leads to disengaged customer service, weak sales, and poor brand reputation.

In one of my previous ventures, we made some amazing hires—and a few terrible ones. The bad ones weren’t because they lacked talent. In fact, some were incredibly skilled. But when values didn’t align, their presence became a drag on the business.

The Psychology of Hiring for Culture Fit

Culture isn’t about perks or office vibes—it’s about shared values, behaviours, and decision-making.

Here’s what the research says about why culture fit matters:

Person-Organization Fit (P-O Fit) Theory – Research shows that employees who align with company values are more engaged, more productive, and stay longer (Kristof-Brown et al., 2005).

Social Identity Theory – People naturally form in-groups. If someone doesn’t align with the company’s culture, they (or the team) will feel isolated, creating division and conflict (Tajfel & Turner, 1979).

Psychological Safety – Amy Edmondson’s (1999) research found that innovation thrives in environments where people feel safe to speak up. A bad cultural fit can destroy psychological safety, leading to less innovation and more fear-based decision-making.

How to Hire for Culture, Not Just Competence

So, how do you avoid the bad hire trap? Here’s what worked for me and what we recommend at Founded Partners:

1. Define Your Culture Before You Hire

If you can’t describe your culture, you can’t hire for it.

Ask yourself:
- What do we value more: speed or process?
- Do we prioritize individual performance or team collaboration?
- How do we handle failure—blame or learning?

ACTION: Write down 3-5 core values that define how your company operates. Make them real, not corporate fluff.

Looking back at one particular start-up, we valued speed, boldness, and execution. If someone needed constant direction, they wouldn’t thrive. Knowing that helped us hire smarter.

2. Interview for Values, Not Just Skills

Most founders ask, “Can this person do the job?”
Instead, ask:
- “How does this person make decisions?”
- “How do they handle mistakes?”
- “What motivates them?”

If someone is incredibly skilled but has misaligned values, they will clash with your team.

ACTION: Use behavioural questions like:
- Tell me about a time you made a big mistake at work. How did you handle it?
- Describe the best manager you ever worked for. What made them great?
- What kind of work environment do you perform best in?

3. Involve Your Team in the Hiring Process

Culture isn’t just about leadership—it’s about the whole team.

Before making a final decision, let candidates meet their future co-workers. Your team will notice red flags that you might miss.

ACTION: Create a “culture check” round in your hiring process where candidates meet a mix of employees. Ask the team afterward: Would you want to work with this person every day?

4. Test for Culture Fit, Not Culture Clones

Hiring for culture fit doesn’t mean hiring people who all think the same.

Diversity in thought, background, and experience drives innovation (Page, 2014). The key is aligning on values, not personality.

For example, at HEXO, we had wildly different people—scientists, marketers, operators. But they all shared a bias for action and a passion for disruption.

ACTION: Instead of asking, “Would I grab a beer with this person?”, ask:
Does this person challenge ideas constructively?
Will they add to our culture, not just blend in?

5. Fire Fast When It’s Not Working

This is the hardest part. But if you hire someone who isn’t a fit, move on quickly.

Holding onto a bad hire because “they’re talented” will cost you more in the long run.

I made this mistake—hanging onto someone because they were good at their job but bad for the team. It wasn’t until they left that I realized how much they had been dragging us down.

ACTION: If someone doesn’t fit after 90 days, have a hard conversation. It’s better for them and for the company.

Final Thought: Culture Fit Is the Key to Scaling Successfully

Hiring isn’t about just filling seats. The right hires accelerate growth, while the wrong ones hold you back.

As a founder, your job isn’t just to hire great people—it’s to hire great people who make your team better.

At Founded Partners, we help founders avoid hiring mistakes and build teams that fuel, not fight, their culture.

If hiring feels like a gamble right now, let’s talk.