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RECRUIT FYI: Recruitment Fees – and the Cost of Getting IT Wrong

Gareth Biggerstaff

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Recruit FYI STEM

In our first monthly RECRUIT.FYI column of 2018, Gareth Biggerstaff, the CEO  of Be-IT looks at the importance of getting the hiring process right – and the costs when it goes wrong.

Gareth Biggerstaff Be-IT CEODid you have a very merry techy Christmas? Did your (Google) dongle ding dong merrily on high?  Has Alexa arranged your life yet?  Aren’t you glad to be back at work?

Assuming the answer to the last question is a resounding yes (there are, after all, only so many mince pies you can eat), then, like me, you’ll have been thinking seriously about the year ahead.  Irrespective of when your financial year-end is, the vast majority of us like to take stock in January and align our businesses for the next few months.  How’s the budget looking?  Will there be a New Year ‘bounce’?  Is headcount too high/low?  And, for digit.fyi’s many readers, perhaps most important of all might be, how the (choose your expletive) are we going to get that Project Manager/.Net Developer/Infrastructure Architect/etc. that the business has been crying out for over the last three months?

Demand for candidates growing

There is no doubt that the demand from the IT sector for quality candidates is enormous and shows no signs of abating any day soon. Whenever we employ a new consultant at Be-IT, we interview them and post the results (which are often quite amusing!) on our site. Almost without exception, they all say that the biggest challenge in the market just now is finding quality candidates.

Moreover, to make matters even more difficult, the number of millennials who are setting up on their own is growing year on year.  We gave a platform to one such young entrepreneur recently and his enthusiasm and work ethic were invigorating. All this vitality is greatly encouraging, but with more start-ups and the increasing use of tech in the day-to-day world meaning the established companies are also growing like topsy, recruiters are under pressure as almost never before.  With that pressure comes the temptation to take short cuts: to fit an almost round/slightly square peg into a round hole.  I can’t stress how important it is to resist this…

We’ve all recruited people who don’t work out. I know I have. In fact, recent research by the Recruitment and Employment Confederation (REC) shows that 85% of firms’ HR decision-makers admit that they have hired duds. I think the other 15% are too embarrassed to admit it.

Reactions to this range from a philosophical shrug of the shoulders to simmering rage at the incompetent who, somehow or other, has hoodwinked his or her way past the interviewers, the psychometric tests, the onboarding programme and the probation period before destroying all the good work your software team had been doing for the previous year.  Note, it’s always their fault: never ours!

Irrespective of who is to blame (and it is important to learn lessons from botched recruitment), what’s not often realised is just how costly it is for your business.  I don’t mean the cost of the recruitment fee or the overall cost of the recruitment exercise itself.  Rather, do you have any idea what the actual cost to your business is of the wrong person being appointed?

The cost of a wrong hire

The REC’s study suggests that one third of HR decision makers who have hired the wrong person think it costs their business nothing.  At the other end of the spectrum, some 20% of HR decision makers don’t actually know what it costs.  So what does it cost?

Basing their figures on a person joining a firm on a salary of £42,000, the REC’s research then factors in the money spent on recruitment and training, the waste of salary, the lost productivity of both the new person and the team in which they work and, most ruinous of all, the increase in staff turnover resulting from others fleeing the scene to avoid working with this person.

This adds up to the not inconsiderable sum of £132,000. At this point, I think it’s incumbent on me to say to everyone who begrudges paying recruitment fees, that you can recruit quite a lot of people for £132,000.  Every time you get the right person, you’re probably saving a six-figure sum; which makes the recruitment fee remarkable value for money in the process…

This is not just a plea for companies to come to professional recruitment firms like Be-IT: rather, to return to my initial point about taking stock at the start of a new year, it’s to make the point that there are many other things you can do to make your company more likely to be a place where new recruits can prosper, to your mutual benefit.  For example, ensuring you have a flexible and inclusive workforce, providing a full and friendly induction process and implementing soft skills assessment tools as part of your recruitment process will all help ensure you minimise the number of duds you hire.  Saving your firm over a hundred grand, not disrupting the existing teams – and having a satisfied and successful new employee – that’s a win-win for everyone concerned.

Gareth Biggerstaff Be-IT CEO

Gareth Biggerstaff

Managing Director - Be-IT Resourcing

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