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Why cutting down hiring costs doesn’t make it cheap

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man with hiring costs headache employer problemsThe harsh reality of hiring costs– we upset ourselves without even knowing it!

Sometimes we make bad hires because we don’t have the necessary expertise or resources to
ensure robust hiring practices.

I can tell you that there is, in fact, ONE simple reason why bad hires occur.

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The reason that we make bad hires is quite simple. It is because we make a compromise. Sometimes we settle for less and don’t ensure we hire the best. (We strive to lower hiring costs, yet end up incurring more.)

We don’t make bad hires intentionally. So let’s look at reasons why it may happen:
 There’s time pressure to fill the vacant position.
 We focus on skills but forget to focus on the person’s attitude.
 We tend to ask the wrong questions instead of the right questions.
 Focusing too much on “nice to have” qualities rather than the “must haves.”
 Hiring bias, such as being seduced into hiring someone we like or someone that “looks” good
 Having the wrong people making or influencing the hiring decisions
 We may bypass or compromise on important checks, for example, reference checks and personality tests.

The solution is to not Compromise – and ensure we minimise the possible causes. We can do this by:
 Having a mindset of securing the best candidate (not the first)
 Reducing pressure to hire quickly
 Hiring for attitude first and skills second
 Focus on getting the “must haves” right before the “nice to haves”
 Ensuring we have the right people involved in the hiring process
 Making hiring a group decision, eg involve key members that will work with the candidate
 Using behavioural based interviewing techniques
 Using robust checks (eg reference checks and personality tests etc)

By doing these things you will experience a higher percentage of successful hires and a reduction in the frequency and expensive hiring costs of a bad hire. For more information on hiring right, contact Neil at 1300Hired. [/read]

 

Employee turnover costs and how to avoid them

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Employee turnover is disruptive, expensive and has both tangible and intangible effects.

employee turnover cost iceberg staff

The cost of employee turnover is like an iceberg.

Like in an iceberg, the tangible effects are visible above the water. Meanwhile, the intangible effects appear underneath, less visible yet often quite larger than it seems.

Staff turnover is more than filling up a job vacancy due to attrition. In fact, the costs exceed the average cost to hire a new employee.

 

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How expensive can a turnover be?

Aside from measuring how much it costs to hire and train a new employee, other factors to employee turnover also exist. When added up staff turnover can cost as much as 1-2 times an employee’s salary or $50k-$100k on average per hire. Here are some more interesting pointers: 

  • When measuring attrition cost, anticipate that the expense of employee turnover varies within the organisation. The costs of replacing an employee rise from entry-level to more senior management and executive positions.
  • While hiring expenses go up the ladder, employee turnover cost goes up, too. Hence, for the CEO of a major corporation, the price can be in the millions as reflected in the share price and market capitalisation.
  • In the Australian construction industry, turnover costs around twice the profit generated by an employee.

Strategies to reduce employee turnover

Excessive staff turnover distracts management, can eliminate profit and cause business failure.

Hence, how do we minimise the hefty cost of replacing an employee? 

  • Have a strong and supportive culture
  • Have strong leadership and management aligned with your work culture
  • Recruit the right people
  • Implement strategies to engage and retain the right staff
  • Have strategies to engage all disengaged staff
  • Have strategies to reduce actively disengaged staff

Employee retention now becomes a big issue. Let us turn the tide and avoid the iceberg that may soon sink our ships. For more information on how to reduce Staff Turnover costs, contact Neil at 1300Hired. [/read]

Why you need to focus on opportunity cost

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Opportunity cost: The valuable commodity we use but can never touch

When making business or day to day decisions, how often do you do things that could be done by others, for example by engaging someone with more experience, skills and possibly at an overall lesser cost?

What is the opportunity cost of you doing these things versus delegating or outsourcing? The results you may find startling.

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Sure, you may save on costs but at what loss of value? What are you losing by not focusing on your core area, and your staff’s core areas of expertise? By focusing on cost rather than opportunity cost, we can forego much higher returns and in turn, this can destroy opportunity and value.

opportunity cost and weigh scaleLet me explain:

  • If your time is valued at $150/hr, why do a job or task valued at $50/hr?
  • The opportunity cost here is $100/hr.
  • If your billable time is $250/hr, then the opportunity cost would be $200/hr
  • If you do sales and your revenue brings in $500/hr, the opportunity cost is a whopping $450/hr

The solution is to determine

  • How can you best leverage your time and the time of your staff
  • Who has the necessary expertise for the job at hand
  • Does the job require industry-specific expertise?
  • Do you have this expertise internally
  • What is the cost and opportunity cost of outsourcing?
  • What are the best and worst case scenarios of doing it internally versus outsourcing?

In making decisions like these, I like to use the best and worst case for and against scenario: What is the best and worse case outcome in doing it yourself versus what is the best and worse case outcome of outsourcing to experts. The answers you provide yourself will often deliver you the best answer.

For more information, contact Neil at 1300Hired.  [/read]

5 things that make a bad hire expensive

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In another article, I have listed the 6 telltale signs an employee can turn into a bad hire any time during his/her tenure. It is imperative to establish how and HOW MUCH our poor hiring decision becomes a liability more than an asset.

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Bad Hire: The (Not-S0) Secret costs that strip away Profit

The problem in making a poor hiring decision is the overall cost to your business. The expense is not just in the out of pockets costs, but also in:

  • loss of team morale,
  • lost time,
  • downtime,
  • management time,
  • and loss of team productivity in covering the gaps.

bad hire employee sleeping at workThe cost of making a bad hire has been estimated at anywhere from 30% of annual salary and up to $50,000. Here are the 5 big costs:

  1. Impact of the rest of your team. They have to pick up the slack, cover mistakes and tolerate any bad behaviour. Morale suffers and your top performers may leave
  2. Impact on Customers. Not fulfilling job responsibilities, taking shortcuts or upsetting customers generally. Your brand and reputation can suffer, and worse, customers may leave.
  3. Performance management. A bad hire drains management time and focus on what could be spent on coaching and developing your good performers. Dealing with complaints from staff and customers also takes up management time.
  4. Business reputation. If a business has a habit of making bad hires, this will adversely affect the reputation of the business and the manager involved. It also adversely impacts the reputation of your leadership
  5. Cost of replacement. This involves recruiting and training costs, management time, loss of productivity and impact of the team both during and after a bad hire leaves.

For more information on how to make better hires and to minimise the occurrence of a bad hire, please contact Neil at 1300Hired.

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How to avoid bad hires and poor decisions

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BAD HIRES: Real horror movie script – shocking audiences in your office

So you’ve brought on a new staff member and things aren’t quite going as expected? If you’re getting that sinking feeling, you are not alone.

The problem we see with bad hires is that they occur more frequently than they should.

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Effects of a poor hiring decision

bad hires zombie

Bad hires are scary.

Bad hires are not only costly but they also negatively impact others in your business.  The cost of loss of productivity can be significant.  The out of pocket costs start to stack up, and this can be debilitating particularly for smaller businesses.

The 6 Red Flags of Bad Hires

Employers realise the true cost of a bad hire once these unqualified employees start bringing disadvantages than profit. If you’ve ever experienced this sinking feeling, then here are the top 6 things to look out for.

  • Failure to produce an acceptable quality of work.
    Employers expect productivity from their staff, even from the recent hires who may take a while before they get up to speed. Regardless of tenure, employees must present a decent amount of quality work. Sadly, bad hires don’t get this and only care about clocking in and out.
  • Failure to work well with other employees.
    We all want harmony in our business most especially in our workplace. Bad hires tend to (although not necessarily) do their things their own way, causing friction with their colleagues and superiors.
  • Having a negative attitude towards work.
    Positivity is imperative to success and so is diligence.  Lacking this feat not only adds to poor performance, but also to a gloomy atmosphere in the workplace. Make sure you correct and end this sooner than later.
  • Immediate problems with attendance.
    Excessive absenteeism and tardiness shatter discipline and efficiency among all things. Consistent attendance infractions may imply a poor hiring decision or a waning employee engagement. Either way, act on it or lose profits.
  • Employee caused customer complaints. Excellent customer service makes any business grow. If your employee causes more problems than positive response, you may have made a bad hire after all.
  • Failure to meet deadlines.
    Completing a project beyond the deadline not only impacts your reputation as a business negatively but can also incur unwanted costs and/or penalties. Avoid having someone on your payroll who deliberately and constantly overlooks targets.

How to avoid hiring the wrong person

There are hefty consequences of hiring the wrong person for the job. Do everything possible to identify indicators of these traits during the recruitment process, rather than have them infiltrate your workplace.

To minimise the chances of making a bad hire, use the best available resources, expertise and technologies when recruiting. To learn how to turn bad hires into assets, please contact Neil at 1300Hired. [/read]

Business growth strategy that makes awesome returns

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If you are a business owner or manager, one of the biggest challenges you face is business growth.

“How to best grow your business?”

Competition is fierce and there are more ways to get your message to market today than ever before. The available technologies and platforms are developing and changing at an exponential rate. If you blink, you can be left behind. So what is the answer?  

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Unless you can sell more to your existing clients, or sell at a higher price, business growth will have to come from other measures. You may rely on referrals, networks, advertising or outbound methods such as cold calling.

In the digital world, many businesses are discovering how cost effective it can be to have inbound strategies where clients come to you. Effective inbound marketing can create a steady flow of leads from businesses that want what you have to offer.

winning business growth strategyOur Campaign for Business Growth

With more than 17 million monthly active Australian users on Facebook, the question for business is not whether you should advertise on the platform, but HOW.

With such a large base of users and a high level of information available about them, it is possible to use a high degree of targeting, to segment audiences and attract them with messages that resonate and with offers that are irresistible.

Business Growth Results

In a recent campaign that we ran, we targeted business owners nationally, specifically Managing Directors, Founders, and CEOs with company revenues between $1m-$5m. The message articulated a single major challenge facing business owners and 7 things to do in order to overcome it.

The results were outstanding generating over 200 leads. These were all business owners with the authority to make decisions and invest in solutions to these problems. The immediate ROI generated exceeded 3:1. That is, for every $1 we invested in advertising, we got $3 back (and still growing). The returns are highly measurable and much better than bank interest.

Imagine if you were able to get 10-20 additional leads per week into your business, what would that mean? What is the lifetime value of a single new customer to your business?

Would you like more information on how to get a steady stream of leads and have customers coming to you? Contact Neil about marketing for business growth now! [/read]

How employee engagement increases Profits by 22%

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Employee Engagement:
The Secret to 21% improvement in Profits

One of the most confronting facts about business performance is the correlation between the engagement of your workforce and the productivity and profitability of your business. In any workplace, there are 3 levels of employee engagement, and the level of engagement in the typical Australia workplace is quite alarming. 

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Employee Engagement Survey

Did you know that in the Average Australian workplace that:

How does Australia do in terms of employee engagement

  • 24% of workers are Engaged; motivated employees and likely to exert extra or discretionary effort.
  • 60% of workers are Disengaged; unmotivated staff and unlikely to exert extra effort.
  • 16% of workers are Actively Disengaged; truly unhappy and unproductive employees.

What this means: in the average Australian workplace, over 75% of the workforce is either disengaged or actively disengaged. This means that too few of your workers are engaged and you are not getting the most out of your employees.

World's employee engagement survey

In contrast, and according to studies by Gallup, world’s employee engagement survey best practices are markedly different, where: 

  • 67% of the workers are Engaged;
  • 26% of the workers are Disengaged;
  • 7% of the workers are Actively Disengaged.

This means that by improving employee engagement from average to world’s best practice, you will increase your productivity by 21% and increase your profitability by 22%

 

There are reasons that cause a Disengaged and Actively Disengaged workforce. However, there are some simple steps that you, as a business owner, can do about it.

The first step is to diagnose where your business sits in terms of employee engagement. To do this we can help you with a free no obligation “Engaged Organisation Financial Snapshot.” To access this snapshot and discover what productivity and profitability increase you can achieve in your business, simply contact Neil at 1300Hired and we will send you a one-page form.

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