It sounds counter-intuitive.
Most hiring campaigns don’t come anywhere close to costing £165K, even if you’re using a high-end recruitment firm. How can you save anything close to this figure?
It’s simple really.
So simple that I can tell you the answer in just one line.
But before I do, there’s a catch…
Because some employers, when I tell them how to save £165K on their next hiring campaign, immediately switch off because they think I’m wrong or, at the very least, exaggerating.
So, I’d like to make a deal with you.
I’ll tell you how to save £165K on your next hiring campaign. And if you feel tempted to click away because you don’t believe it, resist that urge.
Because in this article I’m going to show you the numbers that PROVE this strategy is real.
You can save £165,000 on your next hiring campaign by avoiding a BAD HIRE.
And before you brush this off, assuming that when YOU make a bad hire it doesn’t cost you anything like this figure, take a look at the numbers below.
Imagine you’ve hired a new Team Leader on a salary of £42K.
They’re experienced and skilled, but they’re habitually late, unreliable, and struggle from day one to get along with the rest of your employees.
You try your best to resolve the situation, but when one of your best team members takes six weeks off work due to stress caused by this person’s inappropriate management, that’s the last straw.
The manager is fired after eight months in the job.
This kind of thing happens at even the best of companies, and letting the bad apple go was the right call. But how much has this debacle cost you?
·Salary (8 months): £28,000
·Recruiter Fee: £6,300
This bad hire left your firm worse off than before they joined and you’ve paid out the equivalent of £36K for the pleasure.
But what about the collateral damage?
Under this person’s inept management, the five team members they worked with saw their productivity drop by 20%. Assuming they were on a similar salary, that’s £5,600 of waste per employee.
Now we’re over £60K in costs. But you still have to hire a replacement.
·Recruiter Fee: £6,300
·More lost Productivity (it took five months to find a top-notch replacement because you didn’t want to repeat the mistake): £17,500
We’re getting close to £100K in costs, but wait…
Remember that team member who took time off sick because of stress. They decided to take early retirement and never came back to work. You need to replace them as well.
·Recruiter Fee: £6,300
·More lost Productivity (it took five months to replace one of your most valued and experienced employees): £17,500
But we’re still not done…
The bitter cherry on this despair cake was when the business disruption from being understaffed led to you missing out on a big contract with a new client.
Grand Total of direct and indirect costs: £165,150
How does it feel knowing that a hiring mistake can have such an expensive effect?
If you’re doing a little inner bargaining to try to reassure yourself that your hiring mistakes aren’t that expensive, don’t worry, this is a normal reaction.
And, to be fair, not every bad hire costs quite this much. Maybe it doesn’t impact your ability to win new business, so the grand total in the above example would “only” be £115K.
But it cuts both ways. Because the above isn’t a worst-case scenario. Far from it.
What if training costs are more expensive? What if you recruiter charges more? What if one of your two new hires also goes bad? What if the salaries involved are higher?
Bad Hires CAN be Avoided
Remember at the beginning when I said that you can save £165K by avoiding bad hires?
I wasn’t being glib.
A high-quality recruitment campaign WILL reduce your attrition, which means potential savings can be spectacular.
Let’s say 80% of your new hires are still in their role after 12 months. That would be great. That would be way above average.
But what if you could improve that 80% figure by 5%? Or 10%. Or even 20%!
The direct and indirect savings would be tremendous.
Try asking your current recruiter what their retention rate is for their placements after 12 months. If it’s less than 96% (that’s my average) or, worse, they don’t know, why not give me a call and we’ll see what we can do to put things right in a hurry.
For a free review of your hiring strategy and assistance with improving your retention rates, book a free, no-obligation, consultation HERE.
You can also learn more about the perils of the “bad hire” by using our Bad Hire Calculator - using the latest Oxford Economics and Society for Human Resource Management metrics to work out the true cost of a bad hire is to your company.