Research by TalentTrack estimates organisations will end this year having “wasted” £9 billion looking for applicants in the wrong places and then hiring ones that are not as good a fit as they could be.
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Speaking to HR magazine, TalentTrack CEO Mark Taylor said: “The war for talent is the most competitive it has ever been, but organisations' lack of good analytics is seeing them over-invest in channels that aren’t generating any hires, and under-investing in those that do produce their best new talent.”
He added: “One HRD we spoke to was using 40 job boards but the hire rate they were generating was only 1%. Better use of analytics saw them reduce the number of job boards to just eight, but applicants increased by 40% and its hire ratio improved to 11%.” He added: “This is just one example of the huge amount of waste that is going on in recruitment right now."
According to the research, HRDs are under such huge pressure to hire [it found 11% of people will have changed jobs in the last 12 months], that they are opting for a 'scatter-gun approach' – hitting as many job boards as possible, instead of being strategic.
Taylor added: “Companies are not directing their attention where they need to. Lots of HRDs are being wooed by the fact that some job boards appear to bring in hires faster than others, and so they are putting their money there.
"But what they’re not realising is that the retention rates from these sites are abysmal. Analytics might show that different job boards may take longer to find people, but the retention rates of hires from them are better because these boards find people with the right fit.”
Data shows the average recruitment cost of filling a vacancy, using internal or external recruitment methods, is estimated to be around £4,500.
According to TalentTrack this means organisations will have spent almost £18.5 billion on recruitment in the 12 months to September.
Due to the intense competition for skilled workers, candidates in some sectors are being offered pay increases of up to 20% to switch jobs. But with potentially half of this wasted spend, Taylor is urging HRDs not to let the urgency of getting talent blind them into making poor decisions.
“The speed with which HR departments can make offers to people is rightly vital right now – just to get these in-demand applicants off the market," said Taylor. "But it’s not about speed of hire at any cost. HR teams are desperate to find people – and are spending desperately as a result.”
