In the current market, hiring is becoming more and more challenging. Businesses are seeing salaries rising at a higher rate than they ever have, with good quality new candidates asking for higher and higher salaries. Even in the cases where companies are happy to do this, it has a knock-on effect internally as existing staff want to be on the same level.
A large contributing factor to this salary war is the competition - not of candidates, as it used to be, but of employers. The job market currently means prospective candidates have more options than before and are typically in the hiring process with 4-5 companies at the same time.
With candidates having more options than before, our offers have to be better to seem more appealing. Every aspect of our offer is now under scrutiny. Speaking to a client recently, they found their pension contributions under question during an interview as a rival company was offering a higher %, so they had to react.
One thing companies are finding is they have to react faster in the process. As candidates are getting offers from elsewhere, you have to be in a position to offer them something quicker, making decision making faster and increasing the chances of making a mistake.
This also means we find ourselves doing much more of the ‘selling’ during an interview process than before. With candidates in such a position of power, it becomes less about them and more about what we can offer. Couple that with the decrease in time of the hiring process and our chances of making a bad hire increase massively.
So what is the real cost of a bad hire?
I asked this question to my Sales Leadership group recently and we came up with some of the following:
Reputation - a bad hire can damage our reputation with customers and prospects, and damage us internally
Time - we invest huge amounts of time in the onboarding process and training new starters
Emotion - we have an emotional investment with our hires, whether we want to or not and this can be tough to break. We hired them and admitting we made a mistake can be hard. We also want them to succeed, so we put more time into trying to improve them and if that ultimately fails, we feel partly responsible.
Financial - there are huge costs associated with a hire. Typically, there will be a recruitment cost and the cost of their salary and other overheads
Lost Opportunity - Particularly in sales, we have a massive missed opportunity with a bad hire, both in terms of the business they haven’t brought in vs what was expected and the ROI we expect of a hire.
So what is the true cost?
In our recent Sales Leadership session, our numbers ranged from £250,000 - £400,000 - which is something worth fixing.
Head here to read about some of the things you can do to eliminate the chance of taking on a bad hire.