EVERYONE AGREES HIRING the ‘right people’ is the key to running a successful municipality, AND every municipal manager knows that when it comes to hiring, finding those ‘right people’ can be a difficult and protracted process.
TRULY great organizations get the right people on the bus. Then they get the right people in the right seats. (JIM COLLINS AUTHOR OF GOOD TO GREAT)
BUT WHAT IF YOU HIRE THE WRONG PERSON. What’s the true cost of a hiring mistake?
Who could even begin to count the cost of the lasting damage caused to a team, department or even an entire municipality? Aside from the immediate and real cost of the hiring mistake and resulting dismissal, there’s the expense of having to do it all over again. A hiring mistake can affect morale, service attitude, service delivery, and, of course, elections. These basic costs are often multiplied, depending on the seniority of the person concerned. Further, there are nearly always unintended effects when disillusioned team members also leave. Estimates of the true cost of a hiring mistake vary. A quick Google search suggests that two times the annual salary of the bad hire is a good place to start. The Chartered Institute of Personnel and Development (CIPD) estimates two-and-a-half times the salary. The Harvard Business School says it can be between three and five times the salary, and up to ten times for very senior or specialist positions.
Some of the costs can be measured quite easily. Recruiting costs, wasted salary and benefits, training costs, plus a severance package … then there is the cost of going through the hiring process all over again. Add to this the cost of management time, lost service, (in some cases) lawsuits – and, of course, lost votes. All of these can leave you gasping “that was very costly!” But what about the less tangible costs? What price can you put on the damage to your municipality’s name or reputation as an employer? On top of that, if other people from the ‘damaged’ department leave, can you also chalk those costs up to the original “hiring mistake”? Trying to determine the financial implications can make your head spin.
If the right person had been hired in the first place, what impact might that person have had from the beginning, and how much better off might you be now? The wrong person is hired all too often. There are a number of reasons.
Everything from poorly completed reference checking (references that would verify both experience and skill sets) and tired interview questions, to a disregard for cultural fit. All of these can contribute to a faulty decision. Gaining an understanding of a candidate’s attitude, skills and knowledge can help to determine cultural fit. In the majority of cases, a straightforward investment in the recruitment process is enough to avoid a potential disaster. This is one reason why we created the A.S.K. Selection Tool™ which is included free of charge in every search.
You Do the Math
Take a moment and think about a “hiring mistake” your municipality has made. I have provided a brief list of both tangible and intangible factors that affect the cost of making a bad hiring decision. As you go through the list try to estimate the cost of each factor, and then add it all up. The factors used are as follows:
- Recruiting costs such as fees and advertising, salary, benefits, management time.
- Training costs.
- Lost productivity
- Damaged reputation.
- Loss of goodwill,
- Low staff morale,
- Turnover, loss of other qualified candidates, unfinished municipal projects.
- Reduced productivity
- Loss of voter confidence.
For those who think that the fees of a professional recruiter aren’t worth it have a look at this Hiring Mistake Calculator. I think you’ll change your mind in a hurry! When you do, why not give me a call!
Finding the right person, with the right skills, who is right for your municipality, as well as a good match to your corporate ‘DNA’, is crucial to keeping the organization moving in the right direction. We hire for “FIT” … AND THAT’S ONE THING RAVENHILL DOES WELL!