INNERGISE!

This is a sermon about Recruitment and Retention, so permission to pontificate, preach and protest, if I may!

Let’s make this very, very clear – It will be your people who will decide whether or not your business is a success. It will be your people will determine whether your profit margins are 5% or 55%. It will be your people will decide whether you sleep well at night.

Not you … your people.

And yet, every day we are introduced to managers and business owners who claim they know all this and agree wholeheartedly, and yet time after time fail to put their people first. Why?

Time is an issue, we’re often told, because we’re just far to busy doing all the other things we have to do to run a business. We just don’t have enough time to really plan a recruitment strategy, or properly interview and assess potential new recruits, or induct and train them thoroughly once they’ve started.

And then there are all the costs involved with recruiting and training new staff, such as using recruitment agencies or head-hunters, advertising on the internet or in the local press or bringing in outside trainers.

These are the responses of the short-term leaders, who focus on how many pence they have in their pockets today, as opposed to how many pounds they could have in there tomorrow.

If you do subscribe to this way of thinking, be warned that you may soon find yourself in a downward spiral towards escalating costs and low profit margins, sleepless nights and days upon days fire-fighting problems that could have easily been prevented in the first place.

Have you ever actually stopped to calculate just how much time and money you spend on your people currently and the return you’re getting for that investment?

We developed a time / cost / value matrix for one of our clients so they could do just that. To enable them to get a clearer understanding and assessment of just how many hours and pounds were being lost by their key staff (two managers and the MD) through their current recruitment and retention strategies.

On the recruitment side, it was estimated that through their current practices, their costs to recruit staff were close to £3,600 for every person they recruited, based on the number of hours taken up in recruiting multiplied by the hourly salary (and costs) of that hiring manager, as well as advertising costs and so on.

A local recruitment agency wanted to charge them £3,300 for doing the work for them, which if you include the facts that they would only pay the agency once they’ve delivered as well as the replacement guarantee they offer if that person leaves, then it was clearly a better option for our client to outsource that part of their business to an agency with the expertise and database to match their requirements (not forgetting that they will also regain some precious time to focus on the more “core” elements of their business – in this case selling their product!).

We then looked into the actual “value” the business was getting from their efforts and it became clear that with 1 in every 3 new recruits historically not working out within 6 to 12 months there was a far more significant issue facing the business than they had really anticipated – the knock on effect to other people and areas of the business

When organisations make hiring errors, any one (or more) of the following happens:

Performance drops – the learning curve of a new employee is often long and gradual, so if you multiply the downtime in productivity by the number of times you have had to recruit for that position you get an idea of how much productivity you have lost in that time. Similarly, many departing employees will go through a period of “wind-down” before they finally leave – more productivity downtime.

Resentment grows – In the same way a banana can help ripen other fruit that it touches, so too can a good new recruit! However, quite the reverse can happen if you make a poor (hasty) decision and recruit someone that will negatively impact the rest of the team, often to the point where staff become resentful that the business is using resources deficiently.

Morale gets knocked – furthermore, when someone just isn’t working out, and you’ve tried everything you can to develop them, then the right thing to do for you and for them is to arrange to part ways amicably, and in many cases the high achieving people are often glad to see the low achievers move on. However, this will impact the morale of the rest of the staff in some way – the more people who leave, the more morale is eroded amongst those who stay.

Your reputation is tarnished – your business will very soon create a reputation for itself of not-caring, nurturing or looking after its staff (both internally and externally). Existing staff will feel unstable and uncertain about where the business is going, new staff will be wary of joining the business in the first place and clients will concerned about the stability of the business and the consequential risks that may have on working with you.

Business walks away – people will, more often than not, buy from people and especially those people that they like and have developed a good relationship with. If you lose any of your staff because they weren’t the right people in the first place, or you were unable to retain and motivate them effectively, then you will often lose the relationships that they have built whilst working for you. If they have customer interactivity, some of those customers may move with them to their next job (if in the same industry). If the customer is happy to stay, you still have to spend more time and resources re-building that relationship with someone else in your business before a competitor moves in to pick up the pieces.

We estimated from our calculations and research that this particular organisation we were working with had lost more than 20% of their revenue potential through a blend of these knock-on effects caused by their poor recruitment practices. Adding that to their initial costs to recruit and we were looking at bottom line impact of more than £150,000 per annum!

And now you know why I pontificate, preach and protest!

For the sake of £150,000 …

• Stop and take some time out to plan your recruitment strategies properly
• Don’t be hasty with recruitment decisions, however urgent the role may be
• Spend quality time with new recruits to give them the greatest opportunity to succeed
• If you don’t have the time, or the skills, then find someone else to do it for you
• Think long-term pounds, not short-term pennies