One of the greatest hidden costs to hiring is the often unaccounted for: loss of production. The longer a position goes unfulfilled or the longer an onboarding process takes, the more time is taken off of production. Loss of production can really be measured in two ways. First there is a direct loss to production if a worker is producing a product. Oftentimes, however, there isn’t a straight line in this accounting. Tasks may fall on other workers to pick up the slack while a hiring and vetting process is continuing, for example.
Another instance where the hiring process causes production to be lost is when a bad hiring decision is made. Not only is there a lack of physical productivity from the employee, but also a monetary loss for the company. The Society for Human Resources Management (SHRM) says that a bad hiring decision can cost up to five times that individual’s annual salary. Overall, productivity or quality controls may slip if workers are being asked to take on additional work. Worse still, is the possibility of morale sinking for other workers causing a cascade of turnover.
While loss of production can be very difficult to quantify, the time a position is left open is easier. For example, if your workforce is at 90% capacity for three weeks using process A, but process B can reduce that window to less than a week, isn’t it worth examining? The actual costs may be hard to quantify but the desired outcomes are not. Identifying this choice can help shape your hiring process.
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