HR for SMEs is a blog created in the beginning of 2018 with the idea of sharing knowledge. To bring to Small and medium enterprises owners the knowledge of a HR Manager.
A bad recruitment process means doing an investment in money, and of course, that is not something that you, as a sme owner would really like. Do you?
The CIPD (Chartered institute of Personnel and development) estimates that when done internally, a recruitment and selection process can cost amongst £2500 and £5000 depending on the role we want to cover (in the UK)
¿What do they include in these costs for a recruitment process?
- Published advertisement.
- Invested time in analysing the role and the company needs
- Invested time in reading CVs
- Invested time arranging interviews.
- Invested time in doing interviews (telephone and present)
- Analysis of Candidates
- Onboarding process: Time invested in preparing training, time of the trainer and the time that the new employee would spent until they are efficient)
Careerbuilder explained on a recent study that 41% of the consulted companies had to pay an average cost of $25.000 due to a bad recruitment process and 25% of them had that cost raised to $50.000
It is common that entrepreneurs and small and medium companies put the recruitment process under unqualified or inexperienced hands or those less busy at the time of the recruitment process to look for potential candidates, advertise on social media and speak with job seekers as a first approach.
Lack of experience and knowledge about recruitment techniques are the main cause for the above mentioned issues. However, if you analyse with your employees before starting the process, apart from increasing the employee morale and employee engagement by involving them in the process, you will also have a higher possibility of the team welcoming the newcomers better, as they were involved.
Whenever we start a recruitment process it’s usually for 2 reasons. New tasks that need an specific knowledge to help us or someone has left the company. Our team are the main impulse for the company to keep going and achieve its objectives. Therefore, it is extremely important that we find the right skills for our project.
Look for the high performers, but also think about employee retention. Will that high performer stay with you for a long term? Does your company give them what they are looking for? Look for the best, but be honest with them and with yourself to avoid later problems.
What are the main problems caused by a bad recruitment process?
1. Increase of the employee turnover rate:
You don’t have to calculate your employee turnover rate to know if is too high or not. I am sure you know if a big percentage of your staff leaves every year of if your employees stay with you forever. If you are one of the first ones. You may be doing something wrong on the recruitment process that is causing you a high staff turnover.
Maybe you are looking for what you want, but not what you need, or maybe you promise things you are not able to achieve. Maybe you don’t evaluate the right skills?
If you didn’t take into consideration all the needed variables and you didn’t measure the right competencies, it is most probable that the candidate will not cover your needs for the role. That means that we will not be happy with their work and also that they will not be happy working with you in the long term.
That take us to an explosive situation where we can find ourselves firing or losing the candidate, which means starting again.
That causes that we will not be happy with their work and therefore, the employee will not be motivated. The result of this explosive mix it could end on a dismissal or resignation, which means that you will have to hire again, and start the recruitment process again. However, now you and your team will be frustrated and hopeless, and maybe thinking… “let’s see how long the new one stays”
If you want to see the cost of employee turnover, we have written an article on the cost of hiring a new employee, that could clarify how much is worth it to do a good recruitment process from the very beginning.
2. Increase on Training costs:
If we take for granted that we have dedicated time to all the recruitment steps and that we have taken into consideration the basic things in hiring a good professional for our organisation, this person will start with a good knowledge to perform their work.
However, there is always a need for training. Unfortunately, if the recruitment process was not properly done, and you didn’t check on some of the basics, you could find out after they start that they lack on some of the technological skills, or that they don’t know the industry and you need to spend time with them going through the basics.
If we decide not to dismiss the employee as they may be very good in their technical knowledge, or just the opposite, they are a fantastic sales person who lacks knowledge on the industry, they have shown interest, they are fantastic with the team and they are really motivated. Will you fire them? Probably not, but there is a cost attached to this. How much does it cost your time? What is the annual salary of your employees? How many of their hours will they dedicate to the new employee? Doing a correct onboarding for someone who is perfect for the role and the company will be time consuming. This will be multiplied if the person is not the perfect fit.
sometimes, you follow all the steps and the perfect person doesn’t exists, perfect then. But make sure it doesn’t exists, because the difference costs money.
3. Lost of cost effectiveness in your processes:
If you cut corners on the recruitment process, it is really difficult that the onboarding process will be correct as they are interlinked.
By making sure that during the recruitment process the employee knows all about the company and the role, so they can also make the right decision when coming onboard.
It is extremely important that during the recruitment process you do a magnific work on getting to know the extra help that they will need. As mentioned on point number 2, this will increase your cost, which will be minimum if the person is the correct one, but it will help the person to be efficient as soon as possible.
In some companies and roles that can take up to 3 months, so if you are thinking about not spending their first day with them, think about the salary that you will pay for 3 months and will not be used properly.
If you are looking for the perfect way to plan an onboarding process, we have written some guidelines for you.
As a summary,
A good recruitment process will help you to avoid repeating the process again, also it will help you to find the person that will need less assistance and will be up to speed sooner.
In order to do this, you require some thinking ahead, so please, don’t copy a job description from the internet and publish it looking to have exactly what you are looking for.
Do some homework, and everything will be much easier at a later stage!