Of all the things an organization does, hiring new staff is the most important and far-reaching. Many companies do not realize the costs and effects a mismatch can have. The wrong candidate can result in significant costs for your company. In addition to the salary, there are many more hidden things, such as:
Recruitment
You have incurred recruitment costs, invested time and perhaps even hired an agency. You will lose these costs and have to start over again.
Training time
A new employee must be trained. This is done by colleagues and the manager and that will costs them time. Time they don't really have otherwise you wouldn't be looking for a new employee. If it turns out that the new employee is not really a fit, it is a waste of energy and therefore money.
Production loss
An employee who does not perform, achieves less than expected or hoped. Underperformance is often not immediately noticeable, after all, everyone has or needs a training period. Because poor performance is often only noticed after a few months, the loss of production can be significant.
Loss of orders or customers
You may even miss out on assignments or new customers because of a bad employee. Or that even existing customers leave. Even if you can limit the damage, customer dissatisfaction is never good or bad for your reputation. Finally, it costs you time and energy to normalize the relationship with the customer.
Dismissal costs
Even if you initially work with temporary contracts, firing an employee always costs money. A temporary contract will generally have to be paid for the full term and with normal contracts there are often costs for legal advice
Colleagues
A mismatch often has a negative impact on colleagues and the atmosphere in the department. Not only do they have to correct the mistakes that are made, but the atmosphere within the team often deteriorates if the new colleague is not a good fit for other reasons. The new colleague was supposed to come to help and now the opposite is true.
It is difficult to indicate exactly what the costs are, but it is clear that a mismatch costs more than just the recruitment bill and salary costs. We do not want to say that you are unable to hire new employees yourself, but with an investment that is so important, we recommend using external expertise and independent advice. This can be done in different ways and you must choose what suits you best.
There are roughly 3 ways in which a consultancy firm or recruiter works:
- No Cure, No Pay
- Retained Recruitment
- Headhunting
No Cure, No Pay
You only pay if someone is actually hired, and then often a percentage of the new employee's salary.
Benefits of No Cure, no pay
- You only pay for actually hiring someone
- Recruiter will generally deliver someone quickly
- You can work with multiple agencies / suppliers at the same time
Disadvantages of No Cure, No Pay
- Often only CVs are passed on, the recruiter does not really know the candidate
- Candidate will also be offered to other companies
- Screening will often only be only on the hard skills
- For the recruiter it is important to go for the best paid candidate as they work based on a percentage
- You only know what the costs are when you hire someone
- Guarantees in the event of a mismatch?
Retained recruitment
The total costs of the recruitment process are in principle fixed and the client pays at the start of the assignment or at least pays part of the recruitment costs
Benefits of Retained Recruitment
- Independent advice and selection, the recruiter's fee is not exclusively depending on the income of the new employee
- More attention to corporate culture and soft skills
- Costs known in advance
- Possibility of additional services such as assessments, onboarding, etc
- Possibility of warranty agreements
Disadvantages of Retained Recruitment
- There are costs, even if no one is hired
- Lead time will be slightly longer than, for example, with No Cure, No Pay
- Choice of agency, it must really suit the organization, position and the entrepreneur
Headhunting
Focused search for a specific candidate, often in networks. The costs often consist of two parts. On the one hand the actual recruitment costs and on the other hand a fee upon successful completion of the assignment
Benefits of Headhunting
- Also reaches candidates who are not actively looking for a new position
- Independent advice and selection, the recruiter's fee is not exclusively depending on the income of the new employee
- More attention to corporate culture and soft skills
- Possibility of additional services such as assessments, onboarding, etc
- Possibility of warranty agreements
Disadvantages of Headhunting
- Costs will be higher than with other selection methods, mainly due to the labour-intensive approach.
- Lead time will be slightly longer than, for example, with No Cure, No Pay
- Choice of agency, it must really suit the organization, position and the entrepreneur
The above indicates that you as the company has something to think about before starting recruitment. It remains that hiring new employees is one of the most important and far-reaching activities you can undertake as an entrepreneur.
SPOT-HR works based on a mix of the above:
The fee will be discussed and determined in advance
- Normally separation between recruitment costs and successful completion of the assignment
- SPOT-HR can combine recruitment through modern media, actively approaching potential candidates and networking.
- The starting point is to get the best talent from the market or the ideal candidate, as opposed to only offering a candidate who happens to be available and shows interest.