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How Much are Bad Hires Costing Your Organisation?

Regardless of size, geography or industry, every organisation requires exceptional talent that is both motivated and focused to deliver on customer promises. Yet, it is getting harder to recruit and retain talented, high performing employees.

Recruitment Costs

When considering the costs associated with recruiting and on-boarding new employees, making the wrong decision will result in a massive impact for an organisation.

“It costs an organisation 200% of a senior hires’ annual salary to on board them, this includes recruitment fees, remuneration, back office administration, training and team time. It’s very expensive to replace people,” says Jason Davies, Africa Head of Leadership, Learning, Talent and Resourcing at Barclay’s Africa Group.

Bad hires extend beyond the monetary cost of bringing new people into your organisation. Davies believes that the impact to an organisation of making a bad hiring decision is 50% of an employee’s annual salary.

The Domino Effect
Bad hires can create a domino effect within your organisation and, according to Davies, eradicating inadequate employees is a timely, therefore costly, undertaking. Realising you’ve made a bad hire takes time, he says, and in the months that lead up to the employees last day, your corporate culture could be severely disrupted.

Disengaged employees are likely to place strain on the rest of your workforce, while apathy and negativity may spread through your offices before the employee’s departure. This could result in the loss of more employees, creating a constant need to hire new people.

Davies says this is why quality recruitment methods are imperative. “We live in a world where technological revolutions are constantly changing the way we do business, and advances in recruitment technologies are reducing the chances of making a bad hire. Through science and technology, HR professionals can now make informed decisions when making new hires, based on both culture and skillset”.

Artificial Intelligence (AI) for Talent Management
When hiring and recruiting, HR professionals should consider utilising Artificial Intelligence (AI) solutions that provide a multidisciplinary scientific approach for talent management.

Organisations such as Pivotal Talent are using AI to find ways to change the talent management landscape by reducing bad hires from the get-go. “We wanted to make the process of recruitment and people management more effective, helping companies find and manage the right people with the right skill-set and culture-fit; manage the career progression of employees; and ultimately lower the risk of attrition,” says Juan Swartz, co-founder of Pivotal Talent.

Juan Swartz, co-founder of Pivotal Talent

Science in Action
Pivotal Talent’s solution scientifically measures the ‘gap’ between employee profiles and the qualities required for success in that role. This enables HR professionals to individually tailor career development plans, address skill gaps and deploy targeted training to reach potential future requirements.

“While bad hires will always cost a company, a good hire does the opposite,” says Swartz. “Through AI recruitment solutions, candidate potential is ranked, thus forecasting the candidate’s growth opportunity within the organisation.”

This decreases the need for future hires, especially in more senior roles, as current employees who are attuned with company culture move up the ranks.

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