The fact that a bad hire is a costly mistake isn’t news. It’s a well-known truth that the cost of hiring mistakes can be seen organization wide, from lost time, productivity, and momentum to dips in morale and even to declines in growth. However, in our currently booming hiring economy, where there is stiff competition for top candidates, companies will especially struggle to find and keep quality talent.
Costs of the Wrong Hire
There are many different formulas that HR professionals use to calculate the cost of recruiting, hiring, and retaining talent. This infographic details some of the costs associated with turnover, including bottom-line costs like recruiting and training, lost return-on-investment, and turnover costs. For example, a management-level employee making $68,000 in annual salary would cost the company more than $800,000 if terminated within 2.5 years of hiring. This, shockingly, does not account for the cost of recruiting and hiring a replacement. You should also know, what is IR35? Before you start hiring employees you aren’t sure of.
In addition to the tangible losses associated with turnover, making (and keeping) the wrong hire can cause significant disruption and damage to morale, bringing down staff productivity and creating even more HR headaches in the process. Diminished customer satisfaction, work quality and business reputation can also end up costing the company more money over the long term than the immediate costs of replacing a bad hire.
Effective hiring managers understand that having the best available pool of applicants for every open position is essential for finding the right hire. They employ solid recruiting processes and consistently optimize/reoptimize those processes to ensure the talent pipeline remains full. So, what can companies do in a “seller’s” market? It all starts with smart recruitment. Here are some tips for employers looking to stay competitive while recruiting in a hot job market:
Recruit for Skill, Not Experience.
• Bring the focus onto the person, rather than the experience they have. While some positions may require certain technical skills or certifications, employers can improve resume flow and connect with higher-quality candidates by thinking more expansively about hiring. Transferable skills like leadership, communication, resilience, and problem-solving are often far better predictors for future success than work experience.
• Rethink the way technologies like applicant tracking systems are used. They can give preference and higher visibility to certain candidates with ultra-specific skill and experience requirements.
• Consider training and onboarding as part of the recruitment process. Train the right candidate rather than hire the wrong-but-experienced candidate. Even though many facets of a position can be learned through the right training, companies still place great value on experience.
Cut Bait on Bad Hires
• You can find another position within the organization that is a better fit for the individual or cut ties all together; whatever the solution, act fast. Identify your hiring mistakes and correct them before they start to negatively impact the culture, morale, and the ever-important bottom line.
• Don’t punish good employees for bad hires. It’s often your top performers who end up overworked and burnt out from picking up the bad hire’s slack.
Marshal Resources and Get Help
• Prioritize recruitment efforts. From employer branding to developing an effective interview process to crafting the right onboarding, a lot goes into recruiting. But it’s all worth it. The right employees –matched to the right positions and organizations—being productive, contributing to positive company culture and morale is one of the keys to long-term success and growth for any company.
• A survey from Glassdoor and the Brandon Hall Group found that 69 percent of hiring companies made a bad hiring decision based on a flawed interview process, with 22 percent reporting insufficient talent intelligence prior to recruiting. Given the pace of business today, this is not surprising: smaller organizations are especially more focused on day-to-day leadership and operations than on recruitment. But in such a competitive labor market, this approach is undoubtedly costing these companies valuable talent for future growth.
• Employ the help of third-party recruiting resources to provided needed support and expertise. Firms that specialize in certain industries, candidates with particular skills, or seeking specific roles in a company (such as entry-level positions or for a personal assistant role) can streamline recruiting and hiring while providing top-quality talent who have been pre-screened for needs of the company and role. By using third-party recruiters, companies can save thousands of dollars in costs and hundreds of hours of work, and since applicants from third parties have already been interviewed and “matched” with an employer, they often have much lower attrition rates than employees hired directly.
Regardless of the size or type of your industry or organization, the current hiring climate is challenging. But with a little guidance, support and foresight, employers can compete more effectively for good hires that will stick around and positively contribute to the company. An investment in and commitment to recruitment best practices will pay dividends for years to come and will save companies valuable time and money in the long run. Any company can build and burnish their employment “brand” – positioning itself as a great place to work – by paying attention to recruitment strategies and tactics. After all, as billionaire Ross Perot once said, “leaders don’t flock; you have to find them one at a time.”
Read more: Help Wanted: CEOs Struggle To Fill Talent Gaps