Hess Associates

Is There a Hidden Cost to Hiring?

View from the Recruiting Front

The three most disturbing aspects of the employment situation from a recruiting point of view over this last year have been (1) Turnaround Time – not just the time it takes a client to start the interview cycle, but the amount it takes for the company to place the assignment to the time it finally decides to make an offer. (2) Candidate Attrition during this cycle, and (3) re- interviewing candidates again – see below.

A specific client started the interview cycle last January and by March knew exactly whom they wanted to hire. Fortunately the candidate was working because they finally made them the offer in June which was accepted. But it took over a month to get the interview process rolling and then through a change in the organization reporting structure, all of the candidates, or at least those that who not found other positions if they weren’t working, were re-interviewed. From a recruiter’s point of view, this triples the amount of time spent on the assignment as all parties need to be kept interested in proceeding further and also finding replacement candidates for those that drop out of the process.
Another client kept changing HR contacts and so the process kept on being repeated again and again as the new person was brought up to speed. As similar situations kept occurring I thought it might be a good idea to check with other recruiters to find out if they were having similar experiences. So I called half a dozen long term recruiters and found out that this does not seem to be the exception, as they are encountering very similar types of delays with a subsequent loss of productivity.

Many of the companies we deal with have a cost per hire metric that they use to determine the frontload and backload costs:
(1) Upfront – I have been told that the upfront costs of hiring such as sourcing and hiring (even using recruiting services) are the least expensive,
(2) Hidden Upfront Costs – the cost to the company of not having that needed employee.
(3) Onboarding – the built in costs (post hiring) such as creating the new employee processing records (administrative), the company orientation procedures, on the job training, and eventual productivity increase, are more expensive than the upfront costs. (4) Most expensive of all are the costs of poor productivity and turnover.

The delays that we have seen would seem to add to the upfront costs (1 and 2) of employee acquisition and I would be most interested if there were any companies that determine this metric. Does your company measure the less visible upfront cost of delay in the cost per hire Dollars? Please contact me at Herbert@hessjobs.com .

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