Saving costs on employee selection is false economy

We assume you want your business to grow and that means you will need more employees; perhaps even an employee who will grow your business for you. What so often goes wrong?

I used to tell HR professionals that if they recruit the wrong employee then, if they are lucky, the recruit will leave within four months (and you will need to repeat the recruitment). However, if you are unlucky, you may still be employing the wrong employee when you retire! It certainly resonated with those professionals.

The substantial cost of getting it wrong has been highlighted recently by the CIPD, as reported by ACAS – it is two and a half times the employee’s annual salary. That takes into account wasted salary and benefits, severance package and money spent on training and induction. It doesn’t take account of the cost of re-running the recruitment and probably not the risk of consequences from a dismissal.

Selection is a tricky business. According to long standing research done by UMIST the job interview is about 30% effective as a means of predicting an employee’s future performance. Even with sophisticated selection tools the effectiveness of job selection is rated at around 60% – but nevertheless that represents a doubling in the success rate.

Google executives have calculated the performance differential between an exceptional technologist and an average one to be as much as 300 times higher. What difference would make to your business if you could recruit an exceptional business development manager?

We suggest a few tips:

  • Don’t depend on recruitment agents alone to produce you candidates
  • Remember recruiters have a vested interest in you taking their candidate, so they will sell their candidate hard
  • Develop a person specification and use it to evaluate candidates
  • Look for evidence that a candidate can provide what you need, do not rely solely on what the candidate says / claims.
  • Check out qualifications – you might be surprised how often job interviewees are dishonest
  • Use structured or competence based interviews, or take advice if you are not familiar with these
  • For key appointments involve an HR professional on the interview panel – they will help you to keep your feet on the ground
  • Use job related tasks as a test – make sure these are realistic
  • Use psychological testing from a fully accredited agent

You take advice from an accountant and often from a solicitor in setting up your business. When the growth of that business is at stake, can you afford to go-it-alone in selecting employees?

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