Hiring strategy is often the root cause or factor in quantifying the true cost of hiring, or the cost of not hiring. A simple strategy focused on achieving results is required to avoid unnecessary cost. Frame costs as drivers for hiring strategy.
The commonly perceived costs of hiring a new employee are often limited to those that are budgeted. For example: the employee salary and benefits, recruiting fees, on-boarding and training expenses. Often overlooked is the time and effort by management, HR, internal recruiters, and so on, as it is often not measured.
You may have heard finance say “we save thousands of dollars in the cost of not hiring every week we don’t fill our open positions.”
In the larger scheme, this logic does not make sense, because without the budgeted employee hired, work is not getting done, results are not achieved and productivity is down – and tens of thousands of dollars in cost to the business and growth are building.
Cost of Not Hiring
When this happens, it’s time to seriously consider these un-budgeted costs of not hiring:
- Opportunity cost not having the employee in the role generating ideas.
- Productivity cost not having the employee in the role generating output.
- Management time spent interviewing too many or unqualified candidates.
- Overtime pay to deliver on demand and/or expected productivity.
- Burnout of employees covering the resource gap in the organization.
- Production quality decline from overworked employees.
- Brand erosion when under-performing in your marketplace.
- Customer satisfaction decline resulting from missed expectations.
- Market share erosion when orders are filled faster/better/smarter by a competitor.
Hiring Strategy is a Plan
Business success is built on a strategy, or a plan based on goals. Typically it is an annual plan, with an associated budget. A budget defines required resources to achieve goals. Stakeholders measure meeting or exceeding performance expectations against the plan and budget. A budget quantifies the true costs in the first list. However, it is minimizing risk from un-budgeted costs that is critically important to meeting or exceeding business performance expectations. The cost of not hiring will drive missed expectations
The un-budgeted cost of not hiring can completely derail goals.
Often, adjusting one or two of budgeted costs can reduce or eliminate the potential un-budgeted cost. For example, increasing pay by five percent may be a small investment compared to the cost of missing a goal? It would attract better candidates sooner, fill the gap and eliminate the unintended consequential un-budgeted costs.
A time bound hiring strategy should focus on performing the job/role while eliminating the cost of not hiring. Eliminate arbitrary requirements that don’t make sense are too subjective to measure. This simple strategy might be to hire employees that: can do the work or perform the job, are motivated to work and understand accountability, see your company as a great place to work, and fit the culture, and mesh with your management style.
How to Accelerate Hiring.
Think of tactics last. All too often the strategy gets stuck on questions about what job board to use, at what cost to post, to use a recruiter or not and at what fee, or even simple things like writing the job description.
Review your interview questions. Interviewers tend to focus on reviewing a candidate’s work history of 20 years. Instead, find out if the candidate can do the work and wants to do the work. Hiring motivated and culture-fit with less experience shortens search time. Rethink interview questions to match capability and motivation over history and pedigree.
Radio ads are too good to be true. Those radio ads stating you get qualified candidates by posting your job on their job board. Producing resumes based on keyword searches is not hiring. You must put in the effort and attention required – a website isn’t going to do the hiring for you just because it was on the radio.
Make a decision. Pull the trigger when you have found the candidate that can perform the job and fits the culture. The notion that something better will come along is true – but not before that first qualified candidate finds another opportunity. Why delay getting the work done sooner?
Set a deadline. Company’s also do well to eliminate anything that introduces un-budgeted costs listed above. The solution is to focus on getting the job done, filling the position sooner over later, and a small investment up front can eliminate larger unrecoverable costs and failed goals, later. Making a timely hiring decision is critical to getting the work done sooner.
Use a recruiter effectively. Be responsive and you will be their priority. Pay them for the service they provide. Good recruiters are hard to find and they are in demand. Losing mind-share from your recruiter will most certainly extend your hiring cycle. Put them on a retainer, or pay them an exclusive engagement fee will accelerate your hiring strategy.
Want to learn more about the cost of not hiring? We’re not overlooking the importance of the effort to hire that is required. These ideas can help you hire qualified and motivated employees faster and achieve goals sooner. And, we’re here to help. Our goal as a search and placement firm is to be your partner. We win if you win. Our terms are tuned with your requirements. We have a lot to offer in terms of helping you develop hiring strategy – just ask. Call us today, or visit our website (www.bartonppg.com) and our past blogs for more resources.
