Mistakes businesses make when recruiting can be costly and damaging. Consider the findings from one CareerBuilder survey: The average cost of one bad hire is $14,900. Many companies simply cannot afford these errors.
When a great hire occurs, money is being saved in onboarding and retention costs. Plus, a high-performing employee is great for the bottom line. But how does that break down into hard numbers? It starts by finding the revenue per employee.
This metric can be found in a company’s year-end financial report (or U.S. Securities and Exchange Commission (SEC) report for a publicly-traded company). Multiply that number by 40% for an estimate of the profit margin per hire. Say the revenue per employee is $200,000; then, the profit margin per hire is about $80,000 per year. But an employee in the top 25% of the talent pool tends to bring in at least an additional 25% in profit.
So, in this example, an average hire brings in $80,000 in profit, but an above-average hire brings in at least $130,000. A bad hire could result in a $50,000 loss in profit.
While the above is just one example of the costs associated with bad/good hires, the point is: No amount of money is worth risking when making hiring choices. This is why employers and recruiters should have strategies in place when hiring new talent. But what are the best strategies to adopt?
- 80% of recruitment professionals say employee interviews are essential to hiring.
- 21% of companies wish they hadn’t relied only on interviews when hiring employees and instead also used tests and assessments.
- 24% of companies spend more on online job postings than on any other recruiting strategy.
- 24% of companies say social media is their least-effective recruiting strategy.
- 23% of companies plan to invest more in recruiting technology.
- 11% of companies plan to invest more in an employee referral program.
- 8% of companies plan to invest more in passive recruiting.
7 Strategies for Hiring Talent
Clutch then took these key findings and developed seven strategies that recruiters can use to overcome the challenges they are currently facing and to avoid making hiring mistakes in the future:
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Ask behavior-based interview questions. Clutch research finds that companies must ask candidates questions during interviews that reduce the likelihood of rehearsed answers. Asking behavior-based questions is a surefire way to reduce rehearsed answers. These types of questions also show you how the candidate will perform in the role when given a specific task.
Assess for competency and skill. Clutch suggests testing and assessing job candidates to ensure they can do the job. “Doing well in a job interview does not always mean a candidate is ready to succeed in a role,” says Seamus Roddy, Content Writer and Marketer for Clutch. “Businesses should use job tests and assessments during the recruitment process to ensure that promising candidates will become effective employees.”
Outsource job posting. Writing a job post that hooks candidates and makes them want to work for your company is a difficult task, and if the end results don’t land you any candidates, it’s back to the drawing board. If your job posts aren’t hitting the mark, Clutch suggests outsourcing your posting to a recruitment agency that has experience in writing creative and engaging job posts.
Develop a targeted, selective social media recruiting strategy. While 24% of survey respondents say social media recruiting does not work for them, we have to ask: Do you have a targeted strategy in place for effectively interacting with candidates on social media?
Kaitlyn Holbein, CEO and founder of The Employer Brand Shop, suggests that companies invest in paid, targeted social media recruitment that puts job information in front of the best candidates. Holbein says it is also essential to track and record which candidates apply to jobs through social media. A candidate may find your posting on social media but apply using your website, so it’s important to ask how the person first learned about the listing.
Invest in an applicant tracking system (ATS). If you don’t have an ATS yet, you’re doing your company a disservice. ATSs are a great way to build up your candidate pipeline. When candidates apply, their information is stored in the ATS, and even if they weren’t hired for that specific role, you can still go back to your ATS to source them for a position that may be a better fit. Clutch adds that this technology helps track recruiting data, automate recruiting processes, and centralize the hiring process.
Use and promote an employee referral program. “Referrals give employees the opportunity to recommend people for open jobs at their company,” says Roddy. Consider offering employees a referral bonus when their friends or a former colleague is hired in your company. “Offering bonuses for employee referrals is a simple and inexpensive way for large and small businesses to hire the right people,” Roddy adds. “Businesses should ensure that any referral hires will work out before rewarding the referrer, though.”
Develop a passive recruiting strategy. The best workers may not necessarily be the ones actively looking for a new job, which means you should be looking at passive talent, as well. Unfortunately, only 8% of Clutch respondents plan to invest more in passive recruiting in the next 12 months. But passive recruiting is a low-risk, high-reward strategy that can attract top employees.
“Passive recruiting helps improve the odds that companies are engaged with more worthy candidates,” says Roddy. “Just because an employee isn’t actively seeking a job doesn’t mean they wouldn’t be interested in an opportunity at a different company.”
If you’re sick of wasting money on bad hires, then try revamping your recruiting strategies, and keep the above tips in mind.