STAFF TURNOVER - IT COULD SEND YOU BROKE!
Updated: Nov 10
This elbow touch has replaced the handshake as the way of welcoming new people to the team. But it could be the most costly gesture you ever make. We all know that hiring the wrong candidate or losing a valuable member of staff comes at a cost. But the fact is - it costs much more than you think.
If your competitors are as good as you with what they do and they offer a comparable product or service - then how do you grow your business? The easy solution is to discount your prices, however once you do this there’s no going back and you risk triggering a price war with competitors who may have deeper pockets.
More often than not, the answer is standing right in front of you - it's your 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 offer the most desirable 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 costs much more than you think.
Just think about it - as well as the direct costs - like hiring costs (advertising and recruitment), formal training and wages; there are also indirect costs. These are true and real costs to the business, however they are rarely taken into consideration. They include the lost opportunity costs (the sales or productivity lost through the process), the costs of training plus the costs associated with on-the-job coaching and supervision and the cost to morale or for the distraction it will cause. This all adds up and according to tried and tested research - the true cost of hiring has proven to be 4 to 5 times the annual salary of the position. Now, you don't need to work for a management consulting firm to calculate the cost to recruit a new employee and get them up to speed in a role with a base salary of $50K will be as much as much as $250K. While it won't come out of the Company coffers in one hit and some is the cost of lost opportunities - the cost to your business is real.
Mitigate the Risk to Your Business
As a management consulting firm, the work we do should either add value or mitigate risk - ideally it does both. There can be no doubt that hiring the right people for the job and getting them contributing as fast as possible - makes good business sense. 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 leaving to join your 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.
7 STEPS to Minimise Recruitment Risk
Taking these facts into account, our experience as a business management consulting company and our expert knowledge in recruitment and selection, idResults has identified 7 critical steps that mitigate the risks of making 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 every company, regardless of size. Depending on the type of vacancy not every step may be necessary, but once these principles are adopted each step can be scaled up or down to suit the business.
Position Analysis - combines a Position Description together with a Person Specification for the vacant position.
Recruitment Strategy - an agreed plan that considers the best way to find suitable candidates.
Structured Selection Process - a standard interview plan prepared using methods of targeted selection and with scored assessments for objectivity.
Reference & Criminal History Check - to safeguard company assets and your reputation.
Company Orientation/Induction - a formal approach for delivering important knowledge and information about the Company in a way that supports a positive culture.
Performance Management Plan - a document that details clearly defined and measurable goals to be achieved and identifies learning/training needs.
Mentoring - use your top performers to develop and grow others.