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If you think hiring a professional is expensive, try hiring amateurs.”

—Anonymous

The hiring process at most companies is quite simple. Someone identifies the need to create a new position or to fill a vacant position. A job description is created for the position. The position is advertised. Candidates apply for the position. The resumes are reviewed. The candidates are interviewed. A candidate is chosen. A candidate fills the open position.

With some caveats, I would guess that the hiring process at your company looks something like what I described above.

The Harvard Business Review states that as much as 80% of employee turnover is due to bad hiring decisions. The U.S. Department of Labor currently estimates that the average cost of a bad hiring decision can equal 30% of the individual’s first year potential earnings. According to HR.com, it costs $7,000 to replace a salaried employee, $10,000 to replace a mid-level employee, and $40,000 to replace a senior executive.

Doesn’t that make you think that perhaps we take the hiring process for granted? Perhaps the hiring process should be reviewed, analyzed, and improved? At the very least, we should know how much it truly costs to hire a candidate and we should be doing all we can to hire the right candidate the first time.

Let’s look at some things you may want to consider the next time you are looking to hire.

Review your current hiring process

Just as all business processes need to be reviewed, analyzed, and improved, the hiring process is no exception. When was your hiring process last reviewed? Have you ever measured your hiring success? Have you measured your turnover rate and the reasons why people leave?

How does the process start? How many people are involved? How much does it actually cost to hire an employee at your company?

There are always ways to improve the hiring process and there are many tools that are available to help enhance the process. You can’t fix what you don’t measure.

Consider the true cost of hiring and re-hiring

With rising costs in every area, it is extremely important to know the cost of hiring and the cost of re-hiring. Many companies feel that the only cost associated with hiring an employee is associated with posting the job online or utilizing a recruiter. Nothing could be further from the truth. Those costs are only part of the true cost of hiring. Consider the following:

  • What is the cost of the current loss of productivity associated with the departure of the previous employee?
  • Aren’t there costs associated with the Human Resources department’s process for hiring a new employee?
  • What about the costs associated with the interviewing-process time for the Human Resources department, managers, and the other interviewers?

Now let’s consider the additional costs associated with a wrong new hire.

Once a person is hired, a company will do all they can to make it work. Click To Tweet

The hiring process can be long and tedious and no one wants to admit that perhaps they hired the wrong person. So generally, the hire is not let go during the 90-day probation period, but will be with the company for at least a year. Now we must not only consider the cost associated with hiring this person in the first place, but the cost associated with letting him or her go — costs such as the time and effort put into training, the employee’s total compensation, potential severance based on the position and the circumstances, legal fees depending on the situation. And consider this. All those costs associated with hiring now all come into play again because of having to re-hire for the position.

Knowing the true cost of hiring and re-hiring will make a company think more earnestly about improving the overall process. Many things come to light when there is money involved.

Do all you can to hire the right people

According to a CareerBuilder survey, 38% of companies surveyed hired the wrong employees because they needed to fill the position quickly. We have all faced that dilemma at one time or another, but looking at the information presented above, what are we really accomplishing by hiring employees who will not last and will add very little to resolving the issues associated with why we hired them in the first place?

As interviewers, we hire based on our built-in biases. Click To Tweet

Those biases include our own experience, education, and intelligence. We measure potential candidates consciously or subconsciously using those biases.

Part of hiring the right person is to eliminate as many of those biases as possible and hire based on what kind of performance is needed to perform the job well, not on how we believe it should be done.

Eliminating or at least reducing the biases can be done by performing a job benchmark on the position and then by using assessments to compare candidates to the benchmark.

The goals of the job benchmarking process are to identify the key accountabilities/responsibilities of the position and to eliminate as much personal bias as we can by utilizing the mindset, “If the job could talk, what would it say?” In other words, we want to benchmark the job, not the people who may be currently in the job.

Job benchmarking, and this particular process utilizing the assessments, gives companies insights and information that they wouldn’t otherwise have in order to get closer to hiring the best candidate possible. There is a cost associated with the benchmarking process and the use of the assessments, but nothing compared to the costs associated with hiring the wrong candidate.

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Ron Feher
“Making your business better by making your people better,” captures Ron’s commitment to helping people. He possesses a breadth and depth of experience in a variety of disciplines including job benchmarking, staff development, manager mentoring, executive coaching, employee and management training. Ron has over 30 years of experience working in large, mid-size, and small companies in both technical and management roles with responsibilities covering management and technical training, strategic planning, tactical implementation, P&L, budgeting, vendor and relationship management, user design and testing, PMO, and process/project management of corporate-wide. He has worked for large, midsize, and small companies in a myriad of industries including telecommunications (AT&T), computer manufacturing (Gateway), mergers and acquisitions (RSM EquiCo), real estate, IT outsourcing and publishing (Spidell Publishing). He possesses an MBA in Technology Management, certifications in project management, international management and eMarketing. He is a Value Added Advisor with TTI Success Insights™, a certified Behavior and Motivation Analyst and certified Career Direct® consultant. Ron is currently serving as Irvine Chamber of Commerce Leads Group Chair, FUSION Leaders Chair and Board Member along with being actively involved with several task forces and committees. As an outreach to the community, Ron offers a Career Transition Workshop to churches and non-profits and was a founding member of the Career Coaching & Counseling Ministry at Saddleback Church. Ron’s favorite quote is “Even if you’re on the right track, you’ll still get run over if you just sit there.” – Will Rogers

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