Avoiding the Trickle-down Effect and Focusing on the Candidate Experience
Overview: This is the fourth article in a series of seven on HR for tomorrow’s corporations. Here, we discuss talent acquisition and the hidden costs of bad hiring and vacancies.
It’s rarely the acquisition of an old house alone that creates financial hardship; more problematic are the trickle-down effects of existing problems that were never resolved. Leaky pipes, faulty wiring, drafty windows, and old appliances can all be devastating financially for the unsuspecting home owner. Building a strong basic structure free of underlying problems that can go undetected is also the responsibility of talent acquisition professionals. And as with the acquisition of real estate, there are hidden costs to talent acquisition, which are almost never taken into consideration.
The Hidden Costs of Bad Hiring
Innovation requires a strong workforce built with sensible methods such as effective marketing, targeted interviewing, and most importantly, a focus on the employee. But many companies make the mistake of hiring the wrong person, which is the number one hidden expense when it comes to talent acquisition and retention.
The hiring process includes interview expenses such as travel, hotel and meals; training and orientation; and employment testing and screening. Then, if the wrong employee is hired and subsequently leaves, there are termination costs such as temporary health care coverage or COBRA (Consolidated Omnibus Budget Reconciliation Act) and potential litigation expenses.
If an unhappy employee stays, the costs can be even higher. According to the Huffington Post, dissatisfied employees cost companies billions of dollars, sometimes sending them into bankruptcy. Decreased productivity, more careless accidents, and damage to brand reputation because of poor customer service are all symptoms of poor morale and worker discontent.
The real cost of open vacancies is another hidden cause of financial drain with a tremendous impact on profit. What’s more, it often eludes most organizational cost centers. The combined quantifiable cost of every unfilled position in the organization is no less impactful on the bottom line.
The DHI-DFH Mean Vacancy Duration measure, found the average job vacancy duration of professional and business services jobs to be 26.1 working days in 2016. In May, technology jobs remained open for 25.6 working days.
The figure, to the right, shows how to calculate the cost of vacant positions.
The Trickle-down Effects of Bad Hires
Beyond hidden costs, trickle-down effects of poor talent acquisition could be even more lethal to a business. High turnover can result in low morale, lost customers due to unsatisfactory service, lost sales, reduced product quality, and low production. Colleagues disrupted by turnover must shoulder the additional workload, and an environment where employees come and go is not a healthy one for innovation.
Drake International’s calculator will help you to determine the costs of “hiring wrong” for your organization. (Drake International, Video.) The calculation is based on benchmarking the cost of the employee (salary and benefits), the cost of other employees having to fill in while the position is vacant, the cost of filling the vacancy (hiring manager expenses, moving expenses, advertising and background check costs) onboarding costs, and productivity ramp-up.
Here is a summary of some of the trickle-down effects of having vacant positions, including those affecting management, team cohesiveness, and real costs, according to Smart Resource Toolbox.
Personnel costs: a six-month loss on average manager’s contribution could cost $300K, poor quality work because workers are stretched thin, increased errors, higher turnover, and less creativity.
Teams suffer in terms of cohesiveness and time-to-productivity if a team leader position is lost.
Real costs include delayed time to market, underused equipment, and decreased output.
Management costs: a multiplier effect on productivity and recruitment and worker frustration due to lack of support.
Customer costs: fewer sales, customer attrition because of delayed products, and poor customer service.
Competitive advantage costs: analysts consider the company weak, competitors consider the company vulnerable, and potential employees consider the company to be at risk of failure.
A Better Approach to Talent Acquisition
Take a moment to survey the talent landscape, because it has changed. Skills aren’t quite as easy to come by, and workers are switching employers to gain experience. According to a recent Gallup poll, 60 percent of the younger generation is open to new job opportunities, implying that job hopping is the trend. Companies must attract the right talent now and then hold onto it.
The figure below highlights the changes that have occurred in HRM and emphasizes how the rules have changed for talent acquisition. The employee’s needs and opinions are now the focus, not those of the employer.
The New Talent Acquisition Model
But before you decide to transform your talent acquisition processes, consider the impact of the changing landscape on your organizational ecosystem. Assess what infrastructure and talent you need now to meet the demands of better hiring for the future.
Develop a plan for incremental change in HR processes or a complete make-over if that’s what you need. If the latter is the case, it might be a good idea to bring in outside consultants who have experience with operations similar to your own to help determine the level of change your talent acquisition group needs and how to integrate other HR functions.
Finally, consider how functional your current HR systems are. Could you benefit from solutions that manage the basic, time-consuming tasks such as sourcing candidates? Is your HR ecosystem equipped to build emotional connections with candidates and strengthen your brand as an employer? This is what you should emphasize.
From Talent Seeker to Talent Magnet
Digital transformation has brought new rhetoric with myriad buzzwords: embedded talent acquisition, modular recruitment software, right sourcing, and data-driven recruitment are all good examples. But, refreshingly, the age-old recipe for talent acquisition will not steer you wrong: attract the right candidate, at the right time, at the right price, with the right motivation.
The phrase “attracting” and not “finding” is key to transcending from a Talent Seeker to a Talent Magnet, which is required if the goal is to acquire competitive human capital for innovation. No less important are employment branding and developing candidate experience initiatives.
Employment Branding to proactively attract talent
Applicants research companies as voraciously as companies research applicants. Employer branding is crucial so that potential candidates have a good impression of an employer from job sites such as Glassdoor.com and company websites. Your company website should be mobile-enabled, host a dynamic career page, and the content should be easy to read with minimal scrolling – even better, use micro videos.
Videos are favored by mobile users because a huge amount of information can be transmitted in two minutes. Companies should include subjects that might interest potential recruits and answer questions they might have about the company culture and mission. For example, include introductions to key projects, staff bios, or a tour of R&D or operational premises. These examples by Video Brewery include videos from Starbucks, Shopify, and Dropbox.
How you look as an employer is down to your brand strategy. Potential applicants don’t hesitate to Google your reviews on job sites and even reach out on social media for feedback from current or old employees.
A side effect of the digital era with its penchant for social media platforms, employer review sites, and chat rooms is that companies are transparent to potential employees. This is great for employees but, depending on a company’s brand status, this can be either a benefit or a disadvantage to employers. Employment branding can amount to a PR campaign or disaster management, but it’s essential to build and preserve your reputation.
“We’re all aware of the advancing technologies and shifting corporate trends, and with this evolution brings more transparency making your company a glass house to candidates.” (Wilson HCG)
The following six categories compose a great branding strategy. Address each one, then build a positive online presence for all categories.
Highlight corporate social responsibility activities on your website along with the benefits of working for your organization. Post introductory micro-videos of your employees on your website and social media pages. It gives a personal touch and shows your workplace culture. Respond positively and assertively to any negative reviews that may appear on career pages.
It’s crucial to continuously manage your brand to mitigate any damage to your reputation. No matter how great your culture, there are always disgruntled employees. Any negative feedback should be dealt with promptly to minimize its impact and to show that the company is concerned with employees’ experiences. A negative posting on Facebook, for example, should address the person’s concerns without being defensive.
For expert recruitment, many companies rely on their networks and word of mouth. That way, potential applicants come with a trusted recommendation. Developing a long-term partnership with a recruitment consultant means that a company’s needs are understood.
Good recruiters also maintain long-term relationships with their job search clients, even when they are gainfully employed. The best talent is typically not looking for a job, but a professional recruiter might be able to recognize a niche position and tempt the best person to consider a move.
Talent acquisition is a costly, ongoing endeavor. But in the same way that transforming a weather-beaten house into a fresh, modern, IoT-equipped dwelling is no easy feat, knowing the hidden costs up front, and fixing the underlying problems, will create a stronger structure. That stronger structure will be better equipped to attract and retain talent, because it is more modern, ready to respond to technology advancements, and prepped for the future.
Up next in human resources, Courting the Candidate – Hiring for Innovation.