UK businesses are failing to hire the right person for two out of five roles despite the significant costs of making mistakes, according to a new report from the Recruitment & Employment Confederation (REC).
Perfect match: Making the right hire and the cost of getting it wrong found that 85% of HR decision makers admit their organisation has made a bad hire. Four in 10 employers (39%) agree that the interviewing and assessment skills of their staff should be improved.
This is despite the high costs associated with a bad hire. The REC report found that a poor hire at mid-manager level with a salary of £42,000 can cost a business in excess of £132,000 (so more than three times that individual’s salary) once wasted salary, wasted training, lost team productivity and staff turnover are factored in.
Worryingly the report uncovered a lack of awareness among HR decision makers regarding this significant cost. One in three (33%) whose business has hired the wrong person for a manager, director or senior official role think this costs the business nothing. One in five (22%) ‘don’t know’ how much a bad hire costs.
“Getting recruitment right is even more important during a time of economic uncertainty because businesses need to ensure they’re not wasting money,” said REC chief executive Kevin Green. “Our calculations show that UK businesses are wasting billions every year because of the volume of hiring mistakes being made.”
Speaking at the launch of the report at the REC’s Talent, Recruitment & Employment Conference (TREC) 2017, Green reiterated the imperative to improve hiring practices in the face of an uncertain, challenging, wider political climate.
“We’ve already got skilled talent shortages now, but how much more difficult is it going to be in the next five years?” he asked. “We’ll have less people of working age, Millennials who want to do their own thing [and dip in and out of work], the people we want to attract from overseas are starting not to want to come…”
Pride should be taken in the fact the private sector has generated 2.7 million jobs (when public sector job losses are factored in), said Green. But such impressively high rates of employment have created a tough market for employers, he said, emphasising again the need for improved recruitment practice.
Perfect match: Making the right hire and the cost of getting it wrong has been produced in partnership with Indeed as part of the Good Recruitment Campaign, which is promoting good practice recruitment to UK business in all sectors.
The report contains a step-by-step guide to calculating the price of a bad hire, which aims to enable employers to take an informed and measurable approach.