The phrase about ‘people being a company’s biggest asset’ may be a great cliché, but it’s not always fully understood. Underinvestment in other crucial assets such as technology or machinery would be seen as poor commercial decisions, so why would businesses not invest in recruitment and the recruitment processes?
The personal contribution of every individual employee within a business can have a significant impact on the success of the company, it is therefore critical that every hire you make is the right one as employing the wrong person for a role is a costly mistake to make.
In these financially challenging times, there’s no getting away from the fact that a desire to save money is still a significant factor when it comes to finding your next member of staff, but before you dismiss the thought of using a recruitment professional on the grounds that it is prohibitively expensive, have you considered all of the ‘hidden’ costs of ‘doing it yourself’?
Which of course begs the question – can an organisation really afford not to know what its true cost of recruitment is?
Whilst you can put a 10 x 2 black and white ad in the local paper on their ‘job search’ pages for around £500 + VAT that isn’t a true reflection on the ‘actual’ cost of finding your new employee.
On top of this advertising cost you need to factor in a lot more before you even get close to the true cost. Research shows that more than 50% of recruitment costs are indirect and perhaps one of the most obvious aspects of this is the cost of your (or any line manager’s) time.
As well as taking time out to actually write the ad copy, sifting through and responding to CVs takes time. So if you have an advertisement response of 75 CVs, and spend an average of 5 minutes looking at each candidate prior to either arranging for them to attend an interview or send them an ‘unsuccessful’ letter, it’s easy to see how the indirect costs are starting to add up.
With managers and business owners conducting an average of 10 interviews for each hire, it’s been calculated that the hiring managers’ time could account for around £2,500 per hire. And whilst you might accept that interviewing is an integral element of a manager’s or business owner’s role, you quickly become conscious of lost earning opportunities when revenue generators get involved in this process – after all, there are only 24 hours in the day and all the time they are ‘recruiting’ this is time away from their ‘day’ job.
All this is assuming you do find a suitable candidate from the one ad, if you don’t, then you have to start the whole process again ….
In terms of other costs to the business, it is easier to see the cost of hiring the wrong person if they are on the sales side and are revenue generating, as you can compare their performance to the rest of the team.
Another example of a wrong hire is that a spate of leavers from a team often follows if the personality fit is wrong. This can also do long term damage to the morale of the team or business. This is why it is even more important to invest in the recruitment process up front – much like doing extensive and high quality due diligence before a business deal.
So what do businesses need to think about to ensure they recruit the right person?
Before you begin the recruitment process, it is important to undertake a thorough evaluation of what qualities and skills are required of a new recruit. To do this, you need to begin by asking some key questions:
It is important to understand what factors you need to consider in order to have consistently successful employees. That knowledge can then be applied critically, enabling you to recruit to an objective benchmark moving forward.
The cost implications of recruiting the wrong person are extremely high: did you know that recruiting costs a company approximately 25% in basic annual salary of the employee, plus the cost of time spent interviewing the candidate and then the cost of letting them go?
Investment in the recruitment process and in skilled recruiters can help reduce the likelihood of poor hiring decisions. A good recruitment company will be able to find candidates who add value to their clients’ businesses.
At FieldSearch we pride ourselves in taking the time to understand your company culture, values and environment as well as the needs, skills, personality and attributes of each candidate to ensure a fit on all levels.
Whether you have or haven’t used a recruitment company before, please do give me a call to see how we really can save you precious time and money. Call me, Chimene Felton on: 07875 588390 or email me at: email@example.com
If it’s a cost issue in terms of either internal time or recruitment fees, it’s worth remembering the old housewives’ adage “buy cheap, buy twice”.