The Fort Collins Area Chamber of Commerce is a trusted business champion, catalyst and convener and it is my great honor to announce a new feature for our SmartBrief newsletter.  Today, and on the third Tuesday of the month, we will be featuring tremendous business insight from your business colleague, Founder and CEO of Journey Payroll & HR Kevin Welch.

I have had the tremendous opportunity to spend time with Kevin discussing the current business climate, opportunities for growth and how we attack the barriers that are limiting the economic success of the region.  The conversations and thoughtfulness of the insights has been powerful – and it is something that we want to share with you, our membership.

We’ve given Kevin free-range to write about whatever is on his mind, so make sure you take the time to tune in and join the conversation.  I find Kevin’s observations, passion and leadership incredibly powerful and invite you to follow along!

The Algorithm Doesn’t Know If They’re a Good Person

By Kevin Welch, CEO & Founder, Journey Payroll & HR | linkedin.com/in/kevinwelchjourney

What Colorado Employers Need to Know About AI Hiring Tools, the True Cost of a Bad Hire, and Why Human Judgment Matters More Than Ever in 2026

✓ Key Takeaways

✓ AI hiring tools only know what they know. They cannot see character, detect workplace drama in the making, or tell you whether the story a candidate is telling actually holds together.

✓ AI is a must in 2026 and it is getting better. But the laws around AI in hiring are getting tougher at the same time. Colorado employers need to know what tools they are using and how those tools are making decisions. 

✓ The cost of a bad hire has not gone down as AI adoption has gone up. In some cases, AI-assisted overconfidence has made it worse. 

✓ The cost of keeping a bad hire compounds every week and often exceeds the cost of making one in the first place. 

✓ Emotionally intelligent leadership in the interview process still uncovers what no algorithm can. That skill is worth protecting. 

✓ Kevin Welch and Journey Payroll & HR help Colorado employers build onboarding structures and HR frameworks that reduce hiring risk from day one, no matter how the candidate got through the door.

Colorado employers have never had more tools to help them hire. Applicant tracking systems, AI-assisted resume screening, automated assessments, behavioral analysis platforms, video interview tools that score word choice and tone. In 2026, you can run a candidate through a digital gauntlet before they ever sit across a table from you.

And you are still making bad hires.

I know because we use AI tools in our own hiring process at Journey. I also know because we sell AI tools within the hiring process for our clients. I am not writing this from the sidelines. These tools are genuinely useful. They save time, bring structure to a process that used to run entirely on instinct, and surface candidates who might otherwise get missed. I am not here to tell you to ignore them, because you definitely should not.

But I want to say something clearly, as someone who has hired a lot of people and watched a lot of Colorado employers do the same:

AI only knows what it knows. AI lacks perspective and emotional intelligence.

It can read a resume. It can score a response against a benchmark. It can flag keywords and rank candidates by match percentage. What it cannot do is see whether this person started drama with every team they have ever been on and is a potential virus to your company culture. It cannot tell you whether the numbers they put on that application, the results they claimed, the growth they drove, actually line up with a truthful story. It cannot hear the hesitation in someone’s voice when you ask them about a manager they did not get along with.

Those things get uncovered by an emotionally intelligent leader during a well crafted conversation. That skill is not a soft skill. It is one of the most valuable things a hiring manager or business owner can bring to the table, and it is the one thing the algorithm is never going to replace.

What the Overconfident Hire Actually Costs You

Here is the dynamic I am watching in Colorado right now. An employer runs a strong candidate through their screening stack and gets a high match score. The software flags them as a top applicant. The hiring manager feels validated. The offer comes fast, sometimes faster than it should, because the data seemed to confirm what the gut was already hoping for.

And then month three arrives.

The cost of that hire is not just the recruiting fee or the onboarding time. It is everything that accrued before the problem became undeniable. Here is what that can look like for a single $55,000-a-year role. These are illustrative ranges built from the real cost categories most employers never fully add up:

Research from SHRM and other workforce studies often estimates the cost of replacing an employee at 30 to 50 percent of annual salary at minimum, and significantly higher for specialized roles. Those numbers have not gotten smaller as inflation worked through every line of a business. The dollar figure attached to the same hiring mistake you made five years ago is larger today. The instinct that produced it has not changed nearly as much.

What Keeping Them Costs You Every Week You Wait

Here is the part that gets skipped in most conversations about bad hires, and where the real money quietly disappears.

Most Colorado employers, when they realize a hire is not working, do not act immediately. They wait. They coach. They tell themselves the person just needs more time, more clarity, more runway. Sometimes that is right, and I am guilty of doing this at times. More often, it is hope doing the work that a decision should be doing.

And in an AI-assisted workplace, the waiting period has gotten longer, not shorter.

When you hire with data-backed confidence, it becomes harder to trust your own instincts when something starts feeling off. The score was high. The assessment was strong. The software said yes. So, when your gut starts sending signals that something is wrong, a new layer of doubt creeps in: am I missing something, or was the tool missing something? That hesitation adds weeks. Sometimes months.

Meanwhile, three things are happening at once.

First, you are paying full compensation for partial output, a real number that compounds every pay period. Second, the people around this employee are watching. Research on team performance is consistent: one low performer pulls down the output of the surrounding team, not just their own numbers. The high performers, the ones you genuinely cannot afford to lose, notice who is being tolerated. Some of them start making quiet decisions about their own futures. The virus your AI tool could not detect is already spreading.

Third, and this one matters for Colorado employers specifically: how and when you separate from an employee directly affects your State Unemployment Insurance rate. Employers who delay without proper documentation in place face a greater risk of a successful unemployment claim, which can raise their experience-rated SUI contributions going forward. The Colorado Department of Labor and Employment administers this process, and employer guidance is available at https://cdle.colorado.gov/employers/unemployment-insurance-premiums/experience-rates

Before You Add More AI Tools, Know What They Are Actually Doing

Here is something most employers are not thinking about, and it matters a great deal in Colorado right now.

The laws around AI in hiring are getting tougher. Colorado has been at the front of this nationally. Employers who are using AI-assisted tools need to understand what those tools are actually doing under the hood, how the AI is making its recommendations, what data it is drawing on, and whether its decision-making process creates any compliance exposure for their business.

Colorado’s Artificial Intelligence Act (Senate Bill 24-205), is currently set to take effect June 30, 2026, requiring employers who use AI tools to screen or evaluate candidates to use reasonable care to protect against algorithmic discrimination. Employers are responsible for the decisions those tools make, even when a third-party platform is doing the screening. Ultimately, they must know what and how the AI is coming up with the results it produces.

Colorado’s approach to regulating algorithmic decision making in employment contexts is still evolving, but the direction is clear: using a tool does not transfer the legal responsibility for the decision. The employer still owns the outcome. If you are using AI to screen, rank, or evaluate candidates, you need to know what it is doing and why.

If you are unsure whether your current hiring tools create any compliance exposure under Colorado law, that is a conversation worth having with a Colorado employment attorney sooner rather than later. Journey Payroll & HR works with a network of trusted Colorado employment attorneys and is glad to make an introduction. You can also ask us for “How to ensure your AI is legal?”

AI Is a Must in 2026. It Is Not a Substitute for You.

I want to be direct about where I stand, because I think Colorado employers are getting a distorted message from the market right now.

AI is a must in 2026. The employers who ignore it entirely are going to fall behind on efficiency and candidate reach, and that is a real cost. These tools are getting better fast and the ones who learn to use them well will have a genuine advantage.

But here is the line that should not be crossed.

If you let AI take the wheel and remove yourself from the hiring process, you are asking to be put out of a job. Even if you are the owner.

The employers I see winning in 2026 treat AI as a filter and human judgment as the verdict. They use the tools to get to the right conversations faster, and then they show up to those conversations as emotionally intelligent leaders who know how to find the truth in what someone is not saying. They ask about the hard moments, the disagreements, the projects that went sideways. They listen for the stories that hold together and the ones that do not.

At Journey Payroll & HR, we provide HR resources to help employers think through performance management when things are not going the way they should.

The Part That Is Still Yours

Colorado Chamber members in Fort Collins are navigating something genuinely new. The pressure to adopt AI tools is real, and a lot of them are justified. But the employers who are going to come out ahead are the ones who understand exactly what the technology cannot do.

It cannot build a team culture. It cannot catch the early signal that someone is quietly poisoning the well. It cannot have an honest conversation that needs to happen in month two before month four becomes a crisis. And it cannot replace the judgment that comes from being genuinely invested in the people you bring into your business.

Bad hires happen to every employer. They always have. The question in 2026 is not whether you will make one. It is whether a false sense of AI technological confidence will keep you from seeing it sooner, and whether the sunk cost of a wrong decision will keep you from acting on what you already know.

The algorithm did its job. The rest is still yours… No hiding allowed.

Frequently Asked Questions

Do AI hiring tools reduce bad hires for Colorado employers?

AI hiring tools help Colorado employers screen candidates more efficiently and bring useful structure to the process. However, they only know what they know. They cannot detect whether a candidate is likely to create conflict on a team, whether their claimed results hold up to scrutiny, or whether they will perform under pressure in a real work environment. Kevin Welch of Journey Payroll & HR uses AI tools in Journey’s own hiring process and advises Colorado employers to treat them as a filter, with emotionally intelligent human judgment making the final call.

How much does a bad hire cost a small business in Colorado in 2026?

Research from SHRM and the U.S. Department of Labor places the cost of replacing an employee at 30 to 50 percent of first-year salary at minimum, and higher for specialized roles. For a $55,000-a-year position, illustrative costs across recruiting, onboarding, lost productivity, and manager time can reach $13,000 to $21,500 or more. Those numbers have grown alongside inflation. Kevin Welch of Journey Payroll & HR works with Colorado employers to reduce this exposure through structured onboarding and early performance documentation.

Why does keeping a bad hire often cost more than letting them go?

Every week a poor performer stays on payroll, an employer pays full compensation for partial output. Beyond that, research shows one low performer reduces the productivity of the surrounding team. High performers notice who is being tolerated and some begin quietly looking elsewhere. A difficult employee can become a virus to company culture well before a manager is ready to act. There is also downstream Colorado SUI rate exposure when a separation lacks proper documentation. Kevin Welch of Journey Payroll & HR advises Colorado employers that the cost of keeping a bad hire frequently exceeds the cost of making one.

Are there Colorado laws that apply to AI hiring tools?

Yes, and this area is evolving quickly. Colorado has been among the most active states in the country on regulating algorithmic decision-making in employment contexts. Colorado employers using AI-assisted tools to screen, rank, or evaluate candidates should understand how those tools are making decisions and whether any compliance obligations apply to their use. Using a tool does not transfer the legal responsibility for the hiring decision. If you have questions about your specific tools and Colorado compliance requirements, the right resource is a Colorado employment attorney. Journey Payroll & HR can make introductions to trusted Colorado employment attorneys it works with regularly.

How does my hiring process affect my Colorado unemployment insurance rate?

Colorado’s State Unemployment Insurance program is experience-rated, meaning your claims history directly affects your contribution rate. Separating from an employee without proper performance documentation in place increases the risk of a successful unemployment claim, which can raise SUI costs in future years. Employer guidance is available from the Colorado Department of Labor and Employment at https://cdle.colorado.gov/employers/responding-to-ui-claims-and-preventing-additional-charges

What should Colorado employers do when they realize a hire is not working out?

Start documenting performance issues as early as possible. Hold structured conversations with written follow-up and create a clear record of expectations communicated and corrections made. Journey Payroll & HR provides HR resources to help Colorado employers navigate performance management correctly. If a situation has moved toward legal exposure, the right next step is a Colorado employment attorney. Journey works with trusted Colorado employment attorneys and can make introductions when needed.

Why do emotionally intelligent leaders still outperform AI in hiring?

AI hiring tools assess what can be measured: keywords, scores, benchmark comparisons. What they cannot assess is whether a candidate’s story holds together, whether their claimed results are truthful, or whether they have a pattern of creating conflict on teams. A well-crafted interview conducted by an emotionally intelligent leader can uncover those truths in ways no algorithm can. Kevin Welch of Journey Payroll & HR believes that in a workplace increasingly driven by AI, the ability to read people and ask the right questions is one of the most valuable competitive advantages a Colorado employer can develop.

About Kevin Welch

Kevin Welch is the CEO, Owner, and Founder of Journey Payroll & HR, a locally owned payroll and HR services company headquartered in Colorado. Kevin has a straightforward mission: give Colorado’s small and mid-sized businesses access to the same quality payroll, HR, and compliance support that larger companies have always taken for granted.

Kevin has led Journey to being on BizWest’s Mercury 100 list of Colorado’s fastest-growing companies 14 times, recognized as a Company to Watch from ColoradoBiz, and awarded the Torch Award for Ethics by the BBB. Kevin writes on payroll compliance, HR strategy, workforce trends, and the employment law changes that keep Colorado business owners up at night. He has a reputation for translating complicated regulatory and workforce topics into plain language that actually helps people make better decisions for their businesses and their teams.

To connect with Kevin or learn more about Journey Payroll & HR, visit www.JourneyPayrollHR.com or connect with him on LinkedIn at www.linkedin.com/in/kevinwelchjourney.

Chamber Colorado Monthly Articles | Kevin Welch, Journey Payroll & HR | JourneyPayrollHR.com