It's a well known HR statistic that it costs an average of 2.5 times an individual's salary to replace an employee who doesn't work out. This includes recruitment, management time, training, termination costs and lost productivity.
A new survey conducted by Aequalis Consulting shows that lower team morale, decreased productivity and reputational risk are the biggest consequences of poor employee selection.
The survey results, based on 217 responses by employers across a range of industries, indicate that small-business owners are concerned that other negative consequences of poor selection also include the loss of customers and market share, and higher training and recruitment costs. More than 4 out of 10 organisations said the true cost was at least three times the employee's salary.
Poor hiring decisions sap your businesses of time, resources and energy.
Top 10 Hiring Mistakes to Avoid:
- Failing to define job objectives - Create a performance-based position profile.
- Basing the hire on the failing of a previous person - Create a new basis for a new hire.
- An inadequate pool of qualified candidates - Cast a wide net among multiple sources.
- Unstructured or poorly executed interviews - Prepare well, use performance-based questions, assign different roles to different interviewers.
- Evaluating personality instead of capability - Be objective for just one hour!
- Failing to incorporate a recruitment process - The candidate is evaluating you and your firm too.
- Hiring people just like yourself - Balance your traits with complementary skills.
- Failing to thoroughly check references - No news is good news right? Not in hiring!
- Hiring too fast or too slow - An average replacement hire takes 18 months to have an impact. Many start-up businesses bust their budgets by hiring too early.
- Hiring someone without related company experience - Hire someone with contextual experience.
Final thought
Before you begin the recruitment process, take the time to look for possible skills gaps in your team. You may find there is a greater need for filling a different or entirely new position. Before you commit to hiring, consider outsourcing. You can save on time, infrastructure and man power. The savings will help bring about an increase in your revenue, leaving you to concentrate more on your core business and thus eliminating the risk of costly hiring mistakes.
Avoiding these common mistakes can greatly improve the results of your hiring process, giving you an advantage in today's increasingly competitive market.
Simon Boulton is Director of accounting and finance recruitment practice Aequalis Consulting. He has more than 12 years of finance recruitment experience in London and Sydney, where he has launched multiple divisions for international companies. At Aequalis Consulting, he provides tailored strategies for companies in various industries to attract and retain the most talented professionals in the market. Visit www.aequalisconsulting.com.au.
