New research for employment marketplace Seek suggests that hiring the wrong people may be costing small and medium-sized enterprises (SMEs) nearly a billion dollars a year.
The report, based on New Zealand and Australian hiring experiences, has put a $20,000 price tag on the
cost of putting the wrong person into a job for which they did not meet the expectations.
The sum is based on the definite costs of a wrong hire, including the impact on business finances, and the additional recruitment and training needed to get a replacement.
Seek’s New Zealand manager, Rob Clark, said that about one in five hirings go wrong, and, based on the number of SMEs and people being hired, the annual cost has been estimated at about $911 million.
He said many mis-hires happened because time-pressured managers did not take the necessary steps at the start of the hiring process to get the right field of candidates.
“A lot of the time, there’s not that effort put into writing the compelling ad and spending the time in the process so you can hire the right person.”
Clark said a good job advertisement needed to be clear and accurate in describing the role and the expectations for the position.
He said the ad also needed to spell out a salary range, which 80% of adverts did not have, and other conditions such as the ability to work from home.
“All of these are big factors which will help candidates decide whether they are going to apply.”
Clark said such an approach should improve the chances of getting a good selection and qualified candidates to choose from.
Increasingly, he said, artificial intelligence-based systems were available to go through applicants and sort out the best people to interview, as well as check credentials. AI could also sift through employment agency databases seeking potential candidates.
Clark said the country also lacks sufficient suitably qualified people for some industries, particularly in the technology sector, and that could cause managers to compromise on a less suitable person to fill a position.
