We recently sat down with the CEO of an insurance firm who was struggling to fill a key sales position. The spot had been empty for three months and she was ready to bring on a recruiting partner to help fill the role. By asking a few questions, we realized that the empty position was draining her company of thousands of dollars each month. No one had realized it because her team was juggling more work and overflowing to-do lists due to the empty position. The hidden costs of hiring were damaging her business.
Some costs related to expanding your staff are easy to track, such as the price of advertising, background checks and new equipment. Others require a bit of digging to reveal, but are still relatively straightforward to calculate, such as the value of a hiring manager's time spent writing job descriptions and interviewing. So what are the hidden costs — the sneaky, silent items that drain value from businesses, often without their even knowing? Keep your eye out for these stealthy wealth eaters.
- Lost business. This was the biggest culprit for the insurance company. The former sales representative had brought in $40,000 per month in new policies and the position had been vacant for three months. If a new rep had come on board within 30 days, the company would have brought in $80,000+ in revenue.
- Staff fatigue. When an employee leaves, existing staff members typically have to pick up the slack. This often means they work long hours and have less time to take care of core responsibilities. Reliable employees will step up in this situation without too much grumbling – as long as it’s short-lived. When this scenario drags on, however, the result is lower productivity and bruised morale.
- Staff distraction. It’s not uncommon for HR teams to ask staff members on the front lines to be part of the hiring process. They may be asked to vet job descriptions, review resumes or interview candidates. And having their input can be valuable. They know the daily tasks and work environment waiting for the new employee and can offer insight on the likelihood that a particular candidate will be successful. Not surprisingly, bringing non-HR staff into the hiring process carries a cost. Time spent on these tasks is taken away from daily responsibilities. In the short-term, this can be considered a cost of doing business. For searches that drag on, it is a drain on the bottom line.
- Extra training and development time for sub-par candidates. Companies that haven’t found the candidate they want are often tempted to settle for one that isn’t quite the right fit. They may pay a price down the road in the additional time it takes for the new hire to get up to speed in the role. Existing employees often bear the brunt of this as underperformers make their jobs harder. They need to spend time training the new staff member in addition to picking up the slack until the newcomer reaches full performance.
It’s not uncommon for companies to believe they’re saving money by filling open positions internally, without the help of a recruiter. Yet for the insurance firm above and for many other businesses, working with a firm to find the right candidate quickly can protect the bottom line. Contact Hiregy today to find out how we can help your company connect with exceptional candidates.
Learn more by downloading a copy of The True Cost of Hiring.