How hidden costs become very real when recruitment goes wrong

By February 1, 2019Feature

The next time you need to service your car, it would undoubtedly be cheaper in the short-term if you called up a few friends and tackled the job together.

However, unless your friends are mechanics, the chances are the short-term savings will very quickly be obliterated by the longer term costs of fixing the damage they do to your car in the process.

As crazy as it sounds, this is the same approach many organisations take to recruitment.

“We’ll just save the cost of paying a recruitment specialist and do it ourselves,” is a mantra many companies very quickly realise is a time-consuming and costly false economy, or, as we call it, saving money in an expensive way. And it’s deeply inefficient.

There are undoubtedly short-term financial savings to be made if you go through the recruitment process yourself, but what about the costs you may not see?

There are short-term financial savings if you recruit yourself, but what about the costs you may not see? Click To Tweet

So what does this really cost your business?

Lost sales

There are two ways inefficient recruitment can damage your sales forecast – one is in your delay to recruit and the other is in recruiting the wrong person. For example, if your sales representative is expected to bring in $3 million in turnover a year but you delay the recruitment process by six months because you aren’t sure where to begin, don’t have the dedicated time, or are not sure where to look to find the right person, that’s a loss of around $1.5 million to your business.

There are two ways inefficient recruitment can damage sales – one is in your delay to recruit & the other in recruiting the wrong person. Click To Tweet

Similarly, if you hire the wrong person and it takes you six months to get them up to speed, you’re copping the same cost.

Your hiring manager’s time

The simple equation here is that your hiring manager’s time is worth more than a recruiter’s and, let’s face it, they’re better equipped. By the time they’ve perfected the job ad, posted it where they hope it will be found (and forked out more cash for that), and sorted through and vetted potential candidates – they’ve already invested a lot of time and money– and they haven’t even started interviews yet.

Training staff

When individuals are hired for a sales team without using vital sales skills assessment data, the red flags will appear after it’s already too late. And the cost of replacing and training will take your breath away.

We see it happen far too often – the candidate has shown up great on paper and nailed the interview, but without undergoing skills-matching tests and relevant assessments, what they’re really going to bring to the table remains a mystery. And it’s a costly one for the sales teams we work with that need to achieve big sales targets.

The difference between a high-performing sales executive and an inappropriate hire with the wrong skills or mindset can be significant lost sales, lost time and reputation damage – then you need to start the process again, and bring them up to speed fast. And those re-training costs can bite hard.

Staff turnover

It is not uncommon for a company to employ someone they think is the right person for the job only to be back recruiting after six months. That’s a potential loss of half of your annual forecasted turnover, and you need to face the recruitment process and costs again.

Varied research shows it can cost up to 80% of an annual salary to run a successful recruitment campaign.

So what do you do differently to ensure you don’t go down this costly path?

Use assessment data and get it right the first time

Organisations need to consider the short- and long-term costs of their recruitment strategy. This process needs to be treated seriously like any other key plan in developing the company’s future footprint.

It’s also important for companies to use the power of data to ensure they are finding the right people, the first time. The hiring process should no longer be solely based on “gut feel”. Recruitment, if carried out with the right assessment tools, can be far more of an exact science now.

For example, we recently worked with a company who had a sales team of six members with a combined annual turnover of $12 million. Of this team, there was one clear stand-out sales gun who delivered half of the company’s revenue on their own.

Using a psychology-based survey and assessment, they could pinpoint the exact behaviours of the gun sales member they had already and use it as a blueprint to identify similar sales professionals to increase the size of their team with, in turn, their turnover.

This sales skills assessment data allows companies to tailor their recruitment process to be exact in identifying skills, attitude and the selling style of the candidates to complement the needs of your organisation, the fit with the rest of the team,  and your future growth plans.

Following a recruitment process where you eliminate gut feel with the use of an accurate sales skills assessment tool combined with a robust on-boarding process ensures you will have a much better chance of finding the right sales professional for your company – the first time.