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  string(19) "2015-04-29 10:21:39"
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  string(4629) "I personally don’t know of any business owners who are in the business of losing money but as a recruitment professional, I still come across decision makers on a daily basis that take grave risks within their company.

How, Why, What and Really?

Those are all great questions and the short answer is YES, really! This happens mainly when businesses try to recruit talent themselves, especially in a competitive marketplace where there is a shortage of quality candidates.

Successful businesses will always look at costs, return on investment and ensuring they get value for money in everything they do.  However, the interpretation of “return on effort” without putting a “financial component” to the activity is where decision makers continue to make the same mistake when it comes to recruitment.

If you have the infrastructure in place to have an in-house specialist recruitment function where for each vacancy in your business, your internal recruiter can provide you with a short-list of the very “best talent” available in the “biggest talent pool” then you’re the lucky few – it’s business as usual for you!  For the rest of us, we have specific headcounts responsible for specific roles to ensure we are running a successful business.

So when individuals cannot do their job because they are required to help fill gaps in the business due to a loss of a staff member along various overflow effects, this brings me to the million-dollar question;

“What is the Real Cost of Recruiting the Wrong Person?”

The cost implications of recruiting the wrong person are extremely high and there are numerous surveys available demonstrating that recruiting the wrong person can cost your business up to 2.5 times the basic annual salary of the employee.  Effectively, if you recruit a staff with a cash salary of $100,000 and by getting it wrong you can expect the mistake to cost your business $250,000.

That’s a lot of money – are you sure?  How?

Again, those are great questions and here are some key factors hiring managers do not consider when they are trying to risk executing a recruitment sourcing strategy themselves and get it wrong:
  • Salary paid to the existing staff.
  • Costs of time spent interviewing the candidate and then the cost of making them redundant or even worst, lengthy performance management of them out of the business.
  • Time other team members are forced to take from their own day to cover the position whilst recruiting a replacement.
  • Time and effort by the leadership team working through the decision-making process over an exit strategy for the poor performer and disruptions to the business.
  • Once you’ve managed the bad hire out of the business, the recruitment process has to be repeated.
  • Costs incurred for advertising, screening, interviewing, training and development of the new incumbent.
These are just the obvious direct financial costs.  There are the non-obvious costs to your business such as the effect of the team morale where things can snowball into a business with a bad culture of high turnover. This is where it is a significant risk, as it will prevent your business from attracting the very best talent due to the bad reputation. Prevention is always the best cure, so smart businesses partner with specialist recruitment firms who understand their business model, take the stress out of the talent attraction strategy and provide them with the peace of mind that they can focus on running their business instead of having to worry about the recruitment process. Have you experienced the challenges of making a bad hire before?  I welcome your comments and any war stories you may like to share regarding similar recruitment experiences in the comments of this blog." ["post_title"]=> string(53) "What is the Real Cost of Recruiting the Wrong Person?" ["post_excerpt"]=> string(107) "Recruiting the wrong person can cost your business up to 2.5 times the basic annual salary of the employee." ["post_status"]=> string(7) "publish" ["comment_status"]=> string(4) "open" ["ping_status"]=> string(4) "open" ["post_password"]=> string(0) "" ["post_name"]=> string(52) "what-is-the-real-cost-of-recruiting-the-wrong-person" ["to_ping"]=> string(0) "" ["pinged"]=> string(189) "http://www.coxpurtell.com.au/blog/interviewers-block/ http://www.coxpurtell.com.au/blog/culture-culture-culture/ http://www.coxpurtell.com.au/blog/secret-successful-recruitment-partnership/" ["post_modified"]=> string(19) "2016-07-21 09:30:20" ["post_modified_gmt"]=> string(19) "2016-07-20 23:30:20" ["post_content_filtered"]=> string(0) "" ["post_parent"]=> int(0) ["guid"]=> string(36) "http://www.coxpurtell.com.au/?p=3523" ["menu_order"]=> int(0) ["post_type"]=> string(4) "post" ["post_mime_type"]=> string(0) "" ["comment_count"]=> string(1) "1" ["filter"]=> string(3) "raw" }

I personally don’t know of any business owners who are in the business of losing money but as a recruitment professional, I still come across decision makers on a daily basis that take grave risks within their company.

How, Why, What and Really?

Those are all great questions and the short answer is YES, really! This happens mainly when businesses try to recruit talent themselves, especially in a competitive marketplace where there is a shortage of quality candidates.

Successful businesses will always look at costs, return on investment and ensuring they get value for money in everything they do.  However, the interpretation of “return on effort” without putting a “financial component” to the activity is where decision makers continue to make the same mistake when it comes to recruitment.

If you have the infrastructure in place to have an in-house specialist recruitment function where for each vacancy in your business, your internal recruiter can provide you with a short-list of the very “best talent” available in the “biggest talent pool” then you’re the lucky few – it’s business as usual for you!  For the rest of us, we have specific headcounts responsible for specific roles to ensure we are running a successful business.

So when individuals cannot do their job because they are required to help fill gaps in the business due to a loss of a staff member along various overflow effects, this brings me to the million-dollar question;

“What is the Real Cost of Recruiting the Wrong Person?”

The cost implications of recruiting the wrong person are extremely high and there are numerous surveys available demonstrating that recruiting the wrong person can cost your business up to 2.5 times the basic annual salary of the employee.  Effectively, if you recruit a staff with a cash salary of $100,000 and by getting it wrong you can expect the mistake to cost your business $250,000.

That’s a lot of money – are you sure?  How?

Again, those are great questions and here are some key factors hiring managers do not consider when they are trying to risk executing a recruitment sourcing strategy themselves and get it wrong:

  • Salary paid to the existing staff.
  • Costs of time spent interviewing the candidate and then the cost of making them redundant or even worst, lengthy performance management of them out of the business.
  • Time other team members are forced to take from their own day to cover the position whilst recruiting a replacement.
  • Time and effort by the leadership team working through the decision-making process over an exit strategy for the poor performer and disruptions to the business.
  • Once you’ve managed the bad hire out of the business, the recruitment process has to be repeated.
  • Costs incurred for advertising, screening, interviewing, training and development of the new incumbent.

These are just the obvious direct financial costs.  There are the non-obvious costs to your business such as the effect of the team morale where things can snowball into a business with a bad culture of high turnover. This is where it is a significant risk, as it will prevent your business from attracting the very best talent due to the bad reputation.

Prevention is always the best cure, so smart businesses partner with specialist recruitment firms who understand their business model, take the stress out of the talent attraction strategy and provide them with the peace of mind that they can focus on running their business instead of having to worry about the recruitment process.

Have you experienced the challenges of making a bad hire before?  I welcome your comments and any war stories you may like to share regarding similar recruitment experiences in the comments of this blog.

Tags: Company Culture | Cox Purtell | Cox Purtell Blog | Hiring | Permanent Recruitment | Recruitment Adelaide | Recruitment Agency Adelaide | Recruitment Agency Melbourne | Recruitment Agency Sydney | Recruitment Melbourne | Recruitment Sydney | Temporary Recruitment |

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