According to Statistics Canada, more people are now working than before the recession of 2008 and the number of job vacancies is increasing. These statistics reflect what some small business owners have been telling me in recent months. They are having problems recruiting and hiring qualified staff. They are spending an increasing amount of time and money trying to fill vacancies and often settle for candidates who may not last three months.
Having to constantly hire new staff is not only disrupting for the business, it can be a drain on its resources. Business owners usually know the actual costs of advertising, new uniforms, and training. However, they rarely factor in their own time for screening resumes, conducting interviews nor the added administrative costs associated with setting up a new employee’s payroll and benefits. Did you know that the total cost of new employee has been estimated at 50% of the annual wage of the new employee?
For any job, there is usually a period of adaptation for the new employee. Typically, it will take between three and six months for the employee to become fully proficient in their job i.e. 100% productivity. New employees take more time, make more mistakes, and ask for more help therefore disrupting the work flow. This is a loss of productivity. Until they are fully proficient at their new job, a percentage of their salary represents lost productivity. For example, an employee who earns $1200.00 per week and achieves 50% of productivity is incurring $600.00 per week of loss productivity costs.
While the lost in productivity can be estimated, there is another potential cost that is much harder to estimate: lost clients or lost opportunities. A new employee is more likely to make a mistake with clients. While an existing and loyal client might overlook the issue and give you another chance, a new client will probably go elsewhere for business. We have all done it. We don’t like the first impression and move our business elsewhere.
What can employers do? Retention is an obvious element of the solution. Employers who retain employees will avoid recruiting and hiring costs. The other component of the solution is to do a better job at recruiting, motivating, and engaging new employees. With that in mind and to help business owners, we have scheduled FREE webinars on effective recruiting and hiring.
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