Would you invest more than $250,000 in a piece of technology on a hunch or a gut feel? Of course not, so why do companies invest that much or more in their new hires on minimal evidence – a piece of paper, an agreeable conversation and a cursory reference check? We have asked this of many senior managers and watched the realisation dawn on their faces as they recognise this is exactly what they are doing when they make investment / hiring decisions within their own organisations.
Making a poor hire, and recognising and rectifying this within 6 months of the employee starting, can cost up to 2.5 times the employees annual salary. This figure includes salary and on-costs, training expenses, the cost of everyone’s time involved in the process, the impact on morale and culture, the cost of an open vacancy and even loss of potential sales and clients. Therefore a $100,000 person may cost you $250,000 if you get the hire wrong, and even a $40,000 hire could cost you $100,000.
When organisations invest a significant amount of money in a new application or software they will usually undertake all the due diligence required to ensure they get the best return possible on this investment. They will consult with the relevant stakeholders to undertake and document requirements analysis, carry out market research on the available solutions and undertake a rigorous testing and selection process prior to making their investment. So when you consider the cost of a poor hire, why wouldn’t you undertake the same due diligence when hiring your people by ensuring you have a structured and relevant recruitment process?
Hiring decisions matter now more than ever as companies strive to improve the return on their investments, whether it be technology or their people. Decades of research has shown that a structured and relevant recruitment process can minimise your hiring risks significantly and can produce better hiring decisions resulting in a measurably increased return on investment for companies undertaking such a process. Being time poor is no longer an excuse – after all, people within organisations can find the time to assess costs such as a technological solution appropriately. The attraction and assessment of new hires need to be given greater priority when you consider human capital is usually number one or two on the list of an organisation’s spend.
So, is it time for you to consider reducing the risk and increasing the return on your people investment?
To find out how you can improve your recruitment process or have a recruitment strategy tailor made to meet your organisation’s needs, contact Harrison McMillan www.harrisonMcmillan.com.au