Most small to midsized organizations would prefer to deal with false-negatives during hiring (missing out on good talent) than the issues of false-positives (bad hires). Often times (not always) no one is preferable to a bad hire.

A bad hire can set everything back significantly more. Not only do you have to deal with new missed deadlines or poor quality work, but you often have to deal with the fallout with team members. Plus you're using up a lot of management/leadership hours dealing with it.

The impact is even more important the more senior the role. Hiring a bad manager or lead can impact way more than hiring a bad fresh-out-of-school grad.