A company that makes a hiring mistake can be paying the price for a long time, and the cost it comes at can be high. Now, a report from the Recruitment & Employment Confederation (REC) has revealed just how costly hiring mistakes can be for an organisation. The report Perfect match: Making the right hire and the cost of getting it wrong also sheds light on the extent to which making hiring mistakes is an issue in the UK. The conclusion is that hiring mistakes are costing UK businesses billions each year.
The report shows that hiring mistakes are common in the UK, with businesses failing to hire the right candidate for 40% of all roles. Organisations have some understanding of the costs that can result from making unsuitable hires, but still mistakes are made.
Perfect match: Making the right hire and the cost of getting it wrong reveals some worrying statistics that should give all businesses pause for thought. 85% of HR professionals who responded to the REC survey admitted that their organisation has made a hiring mistake. Interestingly, 33% were of the opinion that the bad hire had not cost their company anything. However, the report suggests that such thinking is somewhat optimistic. Instead it suggests that a bad hire made for a middle-management position, with a salary of £42,000, can actually end up costing an organisation in excess of £132,000. The hidden costs attached to poor hiring decisions should not be underestimated. The total cost of money wasted on training, advertising, lost productivity and an increase in staff turnover is a tally that quickly adds up.
The report also shows that almost 40% of employers appreciate that their staff's assessment and interviewing skills need to improve. Worryingly, it would appear that many organisations are underestimating the true financial implications of making a hiring mistake. Similarly, many are not learning how to improve in order to avoid the same mistakes again.
In times of economic uncertainty, it is obviously even more important that organisations get their recruitment decisions right, yet the REC estimates that UK businesses are currently wasting billions each year by making mistakes with hiring.
Organisations should be thorough in calculating the cost of bad hires and take an informed and measurable approach to recruitment investment. Cost/benefit analysis will show the need for businesses to use the services of professional recruitment experts. Making good hiring decisions is obviously a key aspect of business growth. However, getting hiring decisions wrong can be one of the most costly aspects too. This is why employers need to ensure that they are doing all they can to avoid making such mistakes.
This article was written by Simon Julier, Corporate Sales & Development Manager at Pertemps.
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