Hidden Costs of Hiring: 6 Steps to Avoid Final-Stage Fails
Recently, I’ve noticed a costly trend: after a search and interview, the new employee signs a contract but then changes their mind before their first day of work. They only secured the contract to negotiate with their current boss. I hear about these cases when clients come to me in frustration. Not only does a search cost time and expense for the employer, but the last-minute change of heart delays hiring, and the work or project that required the new hire. This is a typical and costly Final-Stage fail. While it’s impossible to eliminate these failures completely, you can reduce them significantly by understanding contributing factors and accelerating your hiring process.
How Uncertainty Increases Hiring Costs
I believe this type of Final-Stage fail is happening more now than ever because of the uncertainty of our time. We currently live in a world that feels unmoored: many organisations and people are still negotiating how to implement hybrid or remote work patterns. There is widespread anxiety about rising inflation and in some places, fears of recession. On top of that are the continuing developments in (generative) artificial intelligence, which have the potential to collapse many existing job categories. In these circumstances many candidates are not always transparent in discussions with potential employers about how many openings they are pursuing, hedging their bets until the last minute or even beyond.
In addition, uncertainty affects how often roles, teams and management are restructured, which adds uncertainty within an employee’s current job, and can contribute to employee dissatisfaction. McKinsey’s research indicates that a median-sized S&P 500 company can lose over $228 million annually to disengagement (usually experienced in the phase before someone quits) and attrition. In my experience, these disengaged employees often interview to secure a contract for negotiation with their current employer, presenting themselves as serious candidates to win the contract. It’s another example of how hiring in a globally uncertain climate can take more time and resources than in the past.
Consider Direct and Indirect Costs of Hiring
Recruiting and hiring new employees obviously has direct costs associated with it but there are indirect, or soft costs too. A position must be advertised, and applicants screened and interviewed – these are direct costs. But soft costs are real too. Open positions also mean a loss of productivity and strain on other employees who might have to cover the responsibilities of that role as well. Onboarding and training also have to be considered before a new hire becomes fully productive. Estimates on hiring costs vary, commonly hovering around a third of an employee’s salary. Gallup and SHRM research suggests replacement costs could be higher – up to two times the annual salary, with 60% of replacement cost being soft costs.
Why Final-Stage Fails Cost More
Considering all this, any hiring attempt that fails at the last stage – for example, a potential hire who gets all the way to a contract signing, or beyond and then changes their mind – is an incredible loss of time and resources. Your other candidates may no longer be available, meaning you must re-start a search process that can be several weeks, or even months long, incurring both additional direct and indirect costs.
How Recruitment Specialists Reduce Final-Stage Fails
Although external recruitment is a direct cost, there can be a large cost advantage in partnering with a Recruitment Specialist. With an improved pipeline for hiring they can accelerate the process and find a better match for the position – both are key factors in avoiding Final Stage Fails. With the process we have developed at Hibernian Recruitment, candidates who arrive at an interview are already fully qualified and motivated for our client’s role – not searching for a strategy to negotiate within their own organization.
6 Steps to Accelerate the Hiring Process
At Hibernian Recruitment, we have analysed the full candidate management funnel and found ways in each phase to optimise efficiency and results. The following steps win better candidates while reducing the hidden costs that can occur with in-house recruitment:
Cultivate A Talent Network: We draw on the community of candidates and freelancers and our personal network of data specialists. We cultivate this community constantly!
Speed Up the Active Search: We tap into hidden sources like academia, and filter candidates quickly through direct feedback within our social media channels. As a result, we can identify candidates faster than in-house recruiting can.
Qualify with Precision: We have open discussions about salary and other motivators. We verify resume claims and streamline steps like NDAs, work permits and other items that must be checked off before ever moving on to an interview.
Perfect Fit: Client, Culture, Tech: By combining our deep understanding of our client’s company culture and technical needs with our own perspective, we can identify excellent matches that last.
Optimise Interviews: Keep It Compact! We ensure candidates are already fully qualified and motivated. We follow up on interview feedback loop quickly to keep this stage as compact as possible.
Secure Lasting Contracts: Our goal at signing is a long-term relationship with our client. Additionally, well-placed candidates become sources for new hires through community events and social media.
Lower long-term costs
One of the best ways to reduce hiring costs is to keep your current employees engaged and motivated. After all, employee attrition carries a high cost too, considering recruiting, training, burnout, and other hidden costs. And attrition can be reduced by hiring the right people in the first place: every new hire is an opportunity improve engagement, productivity and company culture.
Reducing Uncertainty and Hidden Cost with Better Hiring
Uncertainty makes the hiring process more difficult, and the results more important than ever. That’s why navigating the intricacies of hiring in today’s dynamic landscape demands a strategic approach. Partnering with a Recruitment Specialist like us provides more than just a solution; it’s a pathway to efficiency and cost reduction.
If you’d like to delve deeper into how our specialised recruitment strategies at Hibernian Recruitment GmbH can not only accelerate your hiring process but also significantly reduce attrition rates, I would be happy to set up a call with you. Send me a request on our contact form or send me a DM in LinkedIn and let’s talk soon!
