The High Cost of Poor Recruiting

How much is the cost of poor recruiting? Incompetent recruiting adversely affects an organization on many levels, only one of which is turnover. While poor recruiting isn’t the only cause of employee turnover, it may be the single largest contributor. The absence of a hiring system, not providing training to those who do the hiring, or not allotting the time needed to properly vet candidates can become an expensive oversight.

How Expensive is Employee Turnover?

According to a CBS News Report, “Turnover costs include productivity losses during training, recruiting and lost work while a position is vacant. For all jobs earning less than $50,000 per year, or more than 40 percent of U.S. jobs, the average cost of replacing an employee amounts to fully 20 percent of the person’s annual salary.” However, the consequence don’t stop there.

What Do Poor Hiring Practices Affect?

So, without the discipline and effort to find and hire the best candidates an organization becomes populated with “B and C” players — teammates that don’t fit the needs of the company or can’t properly complete assigned tasks. The ramifications ripple outward.

Spending more time training and supervising poor hires, which takes management away from other tasks
Poor hires affect the overall team performance lowering productivity
Too many mistakes, which lowers the quality of products and services possibly damaging relationships with customers
Team morale is directly affected — especially if the poor hire is at the same pay scale as competent hard working employees
Overworking the staff to compensate for poor hires and eventually “picking up the slack” when a poor hire becomes a turnover leading to lowered productivity, mistakes, and morale issues

How to Avoid Poor Hires

To begin with, use a system. There are 21 pages about recruiting and hiring with checklists, outlines, and forms in The New Manager’s Workbook: A Crash Course in Effective Management. Other keys include:

Be transparent about the position. No job is perfect, share the pitfalls and the opportunities during the hiring process
Set realistic milestones from the very beginning; let the candidate know your expectations
Survey employees to learn why they work at the company and what makes them happy — look for the same interests and needs in potential hires
Complete exit interviews and apply what you learn to retain employees and vet employment candidates

How to Attract the Best Candidates

Attracting the best candidates isn’t only about money. Surveys and studies about employee retention, happiness, and attraction never list money as the number one motivator. So what does attract “A” players?

A culture of recognition driven by appreciation for employee contributions
Work life balance, not expecting employees to live to work
A compelling vision — where is the organization headed, how does it help others, and what does this mean for the candidate?
Development, a company that invests in its employees by offering in-house and outside training. This attracts a higher quality recruit— winners want to continue learning
Corporate responsibility. Many top recruits want to work with organizations that give back to the community and they want be part of the process

Not only is the cost of lackadaisical recruiting astronomical when all the ramifications are considered. Because competent, consistent, top-notch recruiting may be the key to the survival of most businesses in the very near future. Some industries such as trucking, Need a Job? The Trucking Industry Needs Drivers, are already experiencing this talent pool crunch. Now is the time to buckle down and improve recruiting competency or face far worse. So, does your organization have a hiring system, tell me about it. If you have any questions, Contact Me.

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