This is such a significant question and one that should not be glossed over. It’s one we have never addressed in all of our blogs, so today I get an opportunity to really stress this point to both candidates and hiring managers. The cost of making a mistake in the hiring process is much greater than what you can imagine for both parties. That is why it’s crucial to make great, not good, hiring decisions. First, we will focus on the hiring manager’s viewpoint. Next week we will look at the cost for the candidate.
Getting Real With A Mistake In The Hiring Process: Statistics & Hard Costs
When you’ve made a mistake in the hiring process, the most basic cost for the hiring manager revolves around time and money. Let’s start off with a statistic: the cost of hiring a $100,000.00 salesperson can be almost triple if you must let him or her go within the first six months, with all the ancillary costs associated with the hiring, and the eventual firing of a new employee. The costs would include both hard costs and soft costs. The hard cost obviously is the salary and the benefits you paid an employee. You reaped no true benefit as it takes a new employee at least six to nine months to get up to speed. If the new employee is in the field of origination, that cost will have no off-setting revenue for that period unless you are selling a quite simple item. However, in a complex sales solution in which public finance and bond counsel is certainly the likelihood of any revenue is slight, every hiring manager in our field knows that it takes at least 18 months to truly ramp up and become profitable from a new hire.
What Happens With The Benefits Portion?
Next would be the benefits package you have graciously provided. There again would have been money well spent but no return on the investment if a mistake in the hiring process is made. Not to say the employer portion of the taxes that must be paid, and if there was a recruiter involved, most likely the guarantee period would have run out; so, that cost needs to be factored in as well regretfully. In addition, you must factor in any costs associated with onboarding and a severance package, if one was contracted for. The severance package would usually not kick in for at least a year, but I wanted to mention that cost as well.
What About The Soft Costs?
Secondly, and maybe even more importantly, would be the soft costs of a mistake in the hiring process. Here we have to look at the time to recruit, the time to hire, and more importantly the time to train. No candidate that becomes an employee will start without any sort of training – no matter how experienced they are. They will have to learn the sales system, tools, and (in our industry) the platform. This time training can take anywhere from three to six months of on-going training. Therefore, it is imperative that you, the hiring manager, get the right candidate. There now is a balance that has to occur, from rushing to fill a spot to waiting to fill the vacant spot. If you are in a normal situation, you have a pool of candidates that you have gleaned from the marketplace as you most likely have been bombarded with resumes. But are they the best candidates? Do you have the time to properly vet each one of them? Even if you use your in-house HR department services, how often do they share a candidate that does not have the background or experience you want? Your time is valuable and it’s that service that a recruiter can provide to you to avoid the costly mistake in the hiring process with the wrong candidate. You will not be interviewing non-qualified candidates when using a specialized recruiter in your field.
How About The Recruiter? Do They Make Mistakes In The Hiring Process?
I am not saying that recruiters get it right all the time; we don’t. We also make a mistake in the hiring process from time to time. However, this is all we do, and we have more experience than a hiring manager that goes to the marketplace every so often and continues through the process. A recruiter in any specialized field is in the marketplace every day talking to passive candidates. The recruiter gets to know them and should be able to identify the right person for the right client. Not every great banker in our case fits each firm, and that’s what makes for a good hire. Those are the best hires, not people that have to have a job, i.e., the resumes sitting on your desk.
If you would like to discuss your options, please reach out for a confidential conversation at 760-477-1284 or email at email@example.com. He can also be reached on LinkedIn. Subscribe to our monthly newsletter here, which is a compilation of our weekly blogs, so you never miss one. You can find our listing in the “supplier and services” section of the Red Book under the title of “executive recruiting.”
About Harlan Friedman, JD & Founding Member, H. Friedman Search LLC. Harlan is a thirty-year veteran Public Finance Banker turned recruiter who specializes in the placement of all levels Public Finance Bankers, Healthcare Bankers, Municipal Advisors, Compliance Officers, Issuers, and Bond Counsels.