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Human resources - Fit for purpose?

Martin Goodwill counts the cost of poor recruitment techniques and outlines the value of assessments in getting the right person for the job.

Suppose a manager in your business came to you asking for £10,000 with only a 25% likelihood of you ever seeing it again, let alone earning a return on it, would you give them the money? Probably not.

Yet that is exactly what your organisation does every time it allows its people to recruit new employees in the ‘traditional’ way (CV, interview, references).

Research in this area shows that every time you recruit someone who is unsuitable for the role they’re hired to perform, by the time you’ve added together all the elements (including recruitment costs, salary, benefits, training, management time spent attempting to improve performance, opportunity cost of having underperforming headcount, etc) it equates to at least six months of that individual’s total costs (not just their salary).

At The Realise Group, we worked with a company that estimated the cost of recruiting the wrong sales executiveat more than $250,000 (£150,000), once the training costs were added in.

This is an extract from the Finance & Management Magazine, Issue 221, May 2014.

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