Every organisation employs exactly the people it deserves, but not necessarily the people it wants. The people organisations employ is the result of the recruitment and selection practices it uses.
If you do not have the people you want then it is time to look at the reasons for employing the wrong people. Ineffective recruitment and selection has many negative consequences, not least being the cost of continuously replacing staff.
Do you know the cost of staff turnover in your organisation and the associated recruitment costs? Not many managers do. Estimating the obvious turnover costs is relatively easy, but what about the less overt costs? CCH Australia provides some useful examples of the costs associated with staff replacement.
Australia Post estimates turnover costs of $12,270 for an employee earning $28,000. This figure accounts for recruitment costs, temporary replacement costs, training costs, downtime, and limited functioning costs of new employees.
It costs the NRMA $48,000 to replace managers, $29,000 to replace senior specialists, $21,000 to replace specialists and $12,000 for all other staff.
According to the Chubb Corporation, it costs 97% of an annual salary to replace the average insurance industry employee, and 150% for professional management staff.
At the lower end of the scale ($12,000 per employee), if a company replaced 100 staff in a year this would equate to $1.2M. How ironic it is that when companies look to save money it is often achieved by shedding staff, when in fact retaining staff and expertise could be a less pernicious and more positive approach!
The above costs are easy to track, but what of the less overt costs? There are very few people who have not worked with an inappropriately selected employee and the effects are all too evident, such as:
- 'Carrying' an ineffective team member
- Extensive time spent on performance management and training and development
- Intra-team and inter-team conflicts
- Staff resentment of management's inability to find suitable replacements
- Disciplinary action and possibly involuntary termination
- Repeating the recruitment process, potentially just as ineffectively again.
Accounting for the costs to business is not unusual when analysing the effectiveness of replacement strategies. Less usual is an accounting for the costs to the employee concerned. Employees may feel ostracised, harassed or bullied, and suffer the associated consequences of low self-esteem and self respect. Additionally, employees' future job prospects could be seriously damaged. How easy it is to blame the inappropriately selected employee for not having what it takes to satisfactorily perform the job as required. And that is exactly what tends to happen. We put all our efforts into 'fixing the problem' (ie the employee), when in fact the employee is simply a symptom of the real problem - ineffective recruitment and selection practices.
So what is the solution? The answer is simply to know what exactly you want when you embark on the recruitment and selection process, and to be future oriented rather than just satisfying an immediate need. This means having:
- The right people,
- In the right numbers and mix,
- For the right reasons,
- At the right time,
- From the right source.
Too often we set out to replace a person rather than fill a strategically defined position. One of the traps we fall into is trying to replace a departing employee based on their personality, character, personal habits, sense of humour etc. However, if we hire someone for the right reasons then we should have in place a recruitment and selection strategy that is part of the larger HR strategic plan, which in turn sits within the larger corporate strategic business plan. The strategic HR plan will take into account the strategic intent of the organisation whether for business contraction, expansion, renewal or stability. The right reasons also relate to the legal obligations placed on organisations not to use discriminatory hiring practices.
Such a plan will identify who the right people will be in terms of desired skills, attributes, qualifications, motivation, and development potential. When recruiting the right people we need to look beyond the vacant position and consider the team. Team balance is crucial to team success and a most suitable time review and restructure a position is when it falls vacant.