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What are your company’s most significant expenses? If you’ve listed real estate costs (mortgage or lease), advertising, labor, and logistics, you’re still missing one of the highest hidden costs of all: recruitment. When you making hiring mistakes or failing to retain good employees and replace them, the costs add up.
Gallup notes that the cost of replacing an employee can range up to double that employee’s annual salary; the direct cost of replacing a failed executive is close to 10 times their salary, according to HBR.
A Career Builder survey found that almost 75% of employers self-report as having made a bad hire and that bad hires can cause significant dips in productivity (up to 37%) and degrade work quality (up to 31%). Northwestern notes that the cost of a bad hire in damage to the company can equal 30% of their projected first-year earnings.
So, how can you avoid making a bad hire? Avoiding these five common recruiting mistakes is an excellent place to start.
According to BCG, digital skills alone make up 70% of the fastest-growing skills worldwide, but interpersonal skills are becoming just as important. Technological coding and interactive skills will rise by more than 50%. High-level social and emotional skills associated with leadership and initiative-taking (known as soft skills) will see a bump of more than 30%.
However, many employers fail to hire for skill sets that are desperately needed to future-proof their workforce. This can lead to significant skills gaps that can be even more costly to fill in the years ahead, as demand for talent rises and the hiring marketplace becomes even more competitive. Don’t hire the employee you need right now. Hire the employee you will need five years from now.
Hiring from without is the most expensive route, almost every single time. Internal hires tend to cost 18% less for the same job role than external hires. Stop paying outrageous hiring bonuses, and invest in upskilling your existing workforce instead.
Making a clear commitment to diversity, equality, and inclusion (DE&I) in hiring is a good jumping-off point. Still, it doesn’t automatically mean your company isn’t engaging in unconscious bias in hiring. A Wharton study found that on randomly generated fake resumes, men with lower GPAs received preference over women with higher GPAs in STEM fields. The same was true for people who held impressive internships at prestigious institutions over those with lived experience in the workforce at a more mundane company.
Your ideal candidate could be right under your nose. Engaging with your workforce builds a deeper understanding of their potential and shows you where to address skills gaps with upskilling. By investing in your existing talent and promoting internal mobility, you increase employee loyalty and retention.
Time-to-hire is costly, whether you’re spending too much time looking for the “perfect hire” or simply bogged down in resumes. Utilizing tools like Censia’s Ideal Candidate Modeling and Instant Candidate Comparisons from Censia can shorten time-to-hire significantly. Being able to finalize candidates, make offers swiftly, and complete onboarding prevents you from losing talent that gets tired of waiting and accepts another offer.
Censia’s Talent Intelligence™ solution allows your company to scale efficiencies, increase diversity and staff quality, and widen the pool from which you can shortlist the most qualified talent. Doing so decreases time-to-hire, optimizes recruiting time and costs, and enables you to future-proof your workforce. The result is better recruitment choices, greater retention levels, and an easy path to avoiding common, costly hiring mistakes.