THE REAL COST OF HIRING WRONG
Recruitment is one of the few industries where people do not need previous experience in order to succeed. They can come from almost any industry, or even straight out of school and be able to build a career in recruitment. There is, however, a downside of this. As you well know, success does not happen overnight. Even the most talented recruiter takes time to start billing – on average a new recruiter can take up to 6 months before they are billing something and even longer until they start to consistently meet targets.
This highlights one of three calculations you need to be doing when hiring for your recruitment company. You need to understand what the real cost is of bringing new people on board, because if you get it wrong, then that cost is money that is literally going down the drain and it reflects the cost of hiring wrong.
Take time to consider and calculate the following 3 hiring costs:
The first of these are your Rec to Rec costs – Do you know what your average rec to rec cost is? Generally it is between £4000 and £6000. It may be higher or lower than this for your business, but it is important that you know what this amount is.
Lost sales cost – This is a cost that is often overlooked, but you need to be aware of it so that you know what the true cost is to your business if that person were to leave. Industry norms reflect that if a new person leaves a company within the first year, the cost of that wrong hire can be between 2 and 5 times the value of their annual salary.
Non-productivity costs – Industry statistics reflect that it takes between 3-6 months for new consultants to start billing. Let’s be ambitious and say that after 3 months they make their first placement and the average billing amount per placement is £5000. This means that for the first 3 months when they didn’t bill anything they actually cost the business £15000.
If you total up these three calculations a conservative estimate would be around £50 000. That is a lot of money for a small business to lose by simply making the wrong decisions and hiring the wrong people.
I have to emphasise though that it’s not just in the hiring process that things can go wrong. Many people hire on instinct, seeing potential in people. Their instincts might well be spot on and the new recruiter may have all the right skills and attitudes to work. But companies often drop the ball when it comes to providing the support and assistance in helping them develop their skills.
So many new recruiters are dumped at a desk with a telephone and told to get on with it – and then expected to get results. That’s a big ask. No matter how simple the task, anyone new to the company needs to be guided through the process of what it takes to be a success. Provide them with a mentor who can show them the ropes and help them to build on the skills they already have to become a top billing recruiter.
People in the job market today are looking for more than just money. They want to know that a job has career prospects and that your company can help them develop their skills. And while this may seem like it’s taking up precious time and resources you need to remember the cost of getting it wrong. Once you have a new recruiter on board you need to do everything to keep them so that they can help you grow your business. If you don’t it prove to be a very costly exercise of constantly looking for new people to recruit.