The True Cost of Recruiting
If you’re surrounded by competitors who are equally good at what they do and offer a comparable product or service, how do you grow your business? The easy solution is to reduce prices, however once you do so there’s no going back and you risk triggering a price war with competitors who may have deeper pockets. While time limited price promotions are a good tactic for attracting new customers and boosting sales turnover, they are a short-term not long-term solution.
More often than not, the answer is ‘people’. You see, it’s the people you employ above all else that can either make or break your business. You can have the best products or services in the world but without the right people working for you it can come to nothing.
Hiring the wrong candidate or losing a valuable member of the team will cost you and it will cost much more than you think.
As well as the hiring costs, there are lost opportunity costs (the sales or productivity lost through the process) plus the costs associated with training and having to provide on-job coaching and supervision. If you take the direct costs along with these indirect costs into account, the real cost of recruitment has proven to be 4 to 5 times the annual salary of the position.
I.e. to recruit a new employee and get them up to speed in a role with a base salary of $50K will cost your business as much as $250K.
MITIGATE THE RISK
It therefore makes good business sense to hire the right people and get them contributing as fast as possible. It’s also important to maximise their productivity and to retain them for as long as possible. To achieve this and mitigate the associated risks you need to consider how you recruit staff, how you choose successful candidates, how you orientate them into your business and what you do to keep them from joining the competition.
Here are some important facts worth considering:
Most companies consider the job offer as the final step in the process.
Studies have shown that changing jobs is one of the 4 most stressful experiences in life – the others being moving home, the death of a loved one and the breakdown of a relationship.
The first 4 to 8 weeks of a new job are critical and will influence how long a person stays, their work ethic, how well they align to the corporate culture and their overall contribution.
Sink or swim is the most common orientation program for new employees.
New employees are rarely given a written set of clearly defined performance goals when starting a new job.
Even in a healthy company, one resignation can quickly become more. That’s because it can affect morale or cause others to think about new opportunities and the need for a change.
Taking this into account and drawing on extensive experience in recruitment and selection, idResults has identified 7 critical steps that mitigate the risks of the wrong decision and minimise the potential cost of recruitment. They provide a structured approach for recruiting, selecting and retaining talented people and apply to a company of any size. Not all are necessary depending on the vacancy and the approach taken with each step can be scaled up or down to suit the business.
1. Position Analysis
Combines a Position Description and Person Specification for the vacant position.
2. Recruitment Strategy
To decide on the best way to find suitable candidates.
3. Structured Selection Process
A prepared standard interview plan based on targeted selection with scored assessments for objectivity.
4. Reference & Criminal History Check
To safeguard company assets and your reputation.
5. Company Orientation/Induction
Provides knowledge and information about the Company and supports a positive culture.
6. Performance Management Plan
Provides clearly defined and measurable goals and identifies learning/training needs.
Using top performers to develop and grow others.
But simply knowing the steps to take is not enough, it’s the tools you use with each step that provide the solution. For more information on these and how you can mitigate the risks to your business, contact idResults.