Speaking as a search consultant of more than 2 decades, it’s no secret that recruiting teams often fail to deliver results. As a result, our industry has earned a bad reputation – but let’s look at some numbers to put the issue in perspective.
- Speaking as a search consultant
- 50% of new hires fail
- The average cost per hire has risen to $4,000 (and is likely even higher, given that this metric is from 2017 before the labor shortage increased)
- 60% of candidates have quit an application process because it was taking too long
- We hire candidates for skill…but employees are only fired for skill 11% of the time. 89% of fired employees are let go for attitudinal reasons
Recruiting Needs a Kick in the Rear
In a nutshell…the recruiting process is really messed up! If other business process had a failure rate of 50%, heads would roll! But for some reason we accept poor results in recruiting.
We treat astronomical recruiting expenses as just another business expense. Meanwhile, we act like bad hires turnover and poor performance are inevitable or problems that can’t be remediated.
It’s all part of the cycle caused by poor recruiting processes. It doesn’t have to be this way. But first, let’s take a closer look at how poor recruiting practices affect our teams…
- Recruiters struggle to find quality candidates or are overloaded with requisitions. They spend as much as 50% of their time sourcing candidates, which leaves them little to no time to build relationships with candidates or hiring managers. They run out of time to work with the hiring manager to find out what the leader really needs for a given position. Meanwhile, they don’t have the time to learn what candidates are truly looking for in a career. As a result, they struggle to make placements and overall candidate quality suffers. Turnover increases proportionally and the vicious cycle starts all over again.
- Hiring managers are unhappy with the quality of their candidates. They ask their recruiters for more and more so they can find better candidates. Now the recruiter has to put in even more overtime to find more candidates! Otherwise the hiring manager may feel they need to “settle” and hire a subpar candidate. Six months later, the employee is failing or quits. Now we’re back to square one.
- Business leaders are frustrated that they’re not able to make better hires faster. They know that open seats and turnover are cutting into the bottom line. They work with agencies that charge commissions to make placements. Unfortunately, commissions motivate agencies to make as many placements as they can as soon as possible. Many focus on quantity over quality subconsciously due to how they are paid. While it may fill seats, the cracks will start to show in 6-12 months when rushed hires fail on the job. The cycle starts anew.
It’s clear that something has to change. Businesses can no longer afford to accept the status quo of 50% hire failure rates at a large cost-per-hire. What better time than 2020?
You Can Break the Cycle. But You Have to Think Outside the Box.
The good news is that there are solutions to these recruiting challenges.
Leaders who are unhappy with candidate quality can work with different recruiters who provide submittal-to-interview ratios of 80% and up. Business leaders can work with recruiting companies that don’t charge commissions, which inherently set up a conflict of interest between cash flow and quality hires.
Most importantly, companies can use people analytics to understand the dynamics of their teams and hire people who will support their business objectives. We use data to inform virtually every business decision – but many businesses don’t use data to guide their hires. Going a step further, businesses need to use data to ensure their teams are performing once they’ve been hired – otherwise, all the money we spend on recruiting is wasted.
We need to recognize that the solution lies in rethinking the entire process and possibly the entire industry. If you’re tired of dealing with all the same old headaches, it’s time to re-evaluate the same old process.
If you want to learn more about people analytics, click the button below to download our eBook. It’ll change the way you look at recruiting and performance management: