Not having the right talent, or needing to offer higher salaries to attract and keep talent, could be a sign of a poor (or no) screening system.
Hiring managers have one of the most demanding functions in a business and while they may not always be recognised for their efforts, their performance can be the difference between sending a business into continuous profitable expansion, slow growth and even bankruptcy.
In fact, it could be argued that the single most important area for any business to focus on is to apply best practice and continuous improvement to the hiring process, as it underlies the quality and profitability of every other process in the business.
With candidate regret on the rise, companies are feeling the pressure to offer higher salaries to attract the best talent. But this is a flawed approach that could negatively impact the business in two major ways.
Firstly, the motivation and longevity of a new team member secured in this way is questionable.
Secondly, high salaries might limit the future scope for pay rises and the available budget for investing in new recruitment technologies and tools, training for the managers, hiring more talent, and so on.
In summary, it will lower margins and thus reduce the business’s competitive edge.
Essentially, a hiring strategy that offers higher salaries is not a guaranteed way to have the highest performing team – but it is a guarantee that you’ll end up with a very expensive team.
2. Paying for hiring the wrong person
A bad hire can cost 2.5 times the employee’s salary after taking into account recruiting, replacement and onboarding expenses.
But the problem goes deeper. A strong hire can boost your business’ bottom line, reputation and team morale but onboarding a ‘bad fit’ can do the opposite. The worst case scenario is that you lose customers and existing high-performing staff, leaving behind a mess that could take management serious time and cost to rectify.
“The question is: how long does it take you to spot the bad hire?” asked Performia Australia director Gareth Jekel at a SmartCompany briefing on the subject of finding and keeping the right people.
“Sometimes it can be three or four years down the track and you realise this person has actually been undermining the business, and has been the cause of retention and customer issues,” says Jekel.
Fifty-six per cent of respondents to a business survey said they had no strategy to improve the quality of candidates and staff to meet expansion and staff replacement.
3. Using the standard process
The current standard hiring process starts with ads that can actually screen out the most productive candidates. It then looks at resumes that mostly indicate the person’s experience and knowledge and not their potential to add value to the business.
This usual process is not only time consuming, it tends to hamper an effective hiring strategy in two major ways.
- Candidates that may add a lot of value to the business can get screened out whilst resumes for lower value candidates look more appropriate.
- The candidates that rise to the top of the screening are the exact same candidates that are rising to the top of other companies’ candidate shortlists, making it harder and more expensive to get them into your business.
The usual process involves a lot of resume reading, filtering, interviews, confusion, only to hire someone and now see how well they perform in the workplace.
You might be quite good at this process, and get acceptable or better results than competing businesses, but how can you know if you hired the candidate/s that would add the most value to your team?
The goal of the attraction and screening process is to locate the person that will add more than the required value to the business, be easy to manage and safe for the team.
This requires a new, different approach to attracting and screening that first locates the potential value a candidate will add to the business: A reversal of the usual attraction and hiring process, and being able to efficiently and accurately assess each candidate’s Production Potential.
Performia has powerful, proven technology on how to get job ads effectively filtering. It can be one of the smallest and cheapest changes that can make the largest difference to the productivity of your team. For more information, download the Essential Guide to Performance Hiring ebook or contact Performia for a complimentary strategy consultation.