Costs of recruitment

How do we work out how much recruitment costs? Well, it gets a bit complicated, because costs can be organised in different ways; in New Zealand we tend to consider direct and indirect costs; in the USA the costs tend to be grouped into external and internal (Phillips & Gully, 2015). Direct costs arise where we can point to that and say this was directly related to hiring a new staff member (such as advertising the position), and indirect costs are costs which are are part of someone's job or overhead (such as HR staff time, travel and expenses for selection and interviews, testing, reference-checking and verification of qualifications). This latter category is remarkably hard to track, even though it has been tried (Tsarenko & Krishnamurthy, 2021).

External hiring costs arise where we pay someone outside our organisation (advertising placement, recruiter fees, referral bonuses, travel costs, relocation costs), and internal hiring costs are self-evident (advertising content or co-ordination, travel/interview/referee costs, and staff time). Apparently 90% of hiring costs - "including testing, reference checking, hiring manager time, and administrative support" - are likely to be external costs (Phillips & Gully, 2015, p. 156).

Recruitment costs, or costs per hire/CPH, used to be guesstimated at something like $13k per person, which I would guesstimate to be more like $20k today. In the USA in 2016 this was considered to a little over $4100 (SHRM, 2016). This is a simplistic model, largely only including direct costs (advertising, testing, verifying, contracts), not indirect costs (screening, interviewing, reviews) or the six or so months it takes for a new staff member to become acculturated to organisational processes, procedures, and to build networks.

Those more complex recruitment costs - including training investment - for trainee accountants were calculated out to a staggering 241% of an accounting graduand's annual salary (Twiname et al., 2011). However, those accounting students require two expensive professional exams to become Chartered Accountants once they have clocked up the appropriate number of hours, which significantly inflates costs in this profession (Twiname et al., 2011). It would be interesting to know whether the percentage has shifted since the original study, and what costs doctors and lawyers rack up!

It is interesting just how pricey it is. I began making a rough list of what needs to be factored in, and came up with quite a substantial list (see the image accompanying this post). And I forgot job sizing.

It is a complex bucket of stuff!

Sam

References:

Phillips, J. M., & Gully, S. M. (2015). Strategic Staffing (3rd global ed.). Pearson Education (UK) Ltd.

SHRM. (2016, August 8). SHRM Benchmarking Report: $4,129 Average Cost-per-Hire. Society of Human Resource Management. https://www.shrm.org/topics-tools/news/shrm-benchmarking-report-4129-average-cost-per-hire

Tsarenko, A., & Krishnamurthy, D. (2021). Understanding and Improving Quality in Firm Recruitment Processes: A case study [report 2021:035]. University of Gothenburg.  https://d1wqtxts1xzle7.cloudfront.net/97248696/483817839-libre.pdf

Twiname, L. J., Samujh, H., & Rae, S. (2011). Accounting for the costs of recruiting and training [paper]. Cambridge Business and Economics Conference (CBEC), Cambridge UK, 27-29 June 2011. https://researchcommons.waikato.ac.nz/server/api/core/bitstreams/1fc33677-9d09-4f9c-a9de-8a69368f7ab2/content

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Different approaches to hiring

In times of closer to full employment, organisations are being forced to take different approaches to recruitment in order to get the people they need. These approaches include:

• Interests: we can ask our staff if they are interested in moving into those harder to recruit roles. We can then arrange training to stage them into the position we want to fill. It makes sense to develop those who already fit our culture, and then recruit for positions which have more available candidates. there are many benefits to this, as we will retain staff for longer, it is a developmental approach, and it generally lowers recruiting fees.
• Recommendations: we can ask our staff to recommend people to replace them, or whom might be suitable to recruit in general. Our staff know who will fit the organisational culture, and if they are staying within the organisation, they have a vested interest in bringing suitable people on board.
• Sponsorship: sponsor a student through the last year of their degree, giving them a paid internship through their breaks, providing they work for us for two or three years after they graduate. This means that we also have the latest knowledge in our organisation.
• Networking: seek new staff through your own networks, including LinkedIn, your University alumni services, or conferences. Post job opportunities through LinkedIn groups, and suggest that conferences you attend have jobs board.
• Associated skills: STEM positions, particularly engineers, can be hard to recruit due to shortage of qualified people in our areas. Instead, looking for associated skills, such as hiring an electrician with PLC knowledge and sponsoring training while in the job can make a significant difference to whether we get the right person. We can also consider recruiting tradespeople or technicians from the defense forces.
• Acquisition: we can takeover a smaller organisation which already contains the staff we need. Providing the takeover or acquisition goes smoothly, and is well thought through, staff should be happy to transition to the new, merged organisation.

In many ways the best approaches are the first two options listed. These are the ones where people who know the organisation are using their knowledge to make the organisation better.

And we should listen.


Sam

• Reference: Rayome, A. D. (27 February 2019). What new tactics are companies using to recruit hires? Retrieved from https://www.techrepublic.com/article/what-new-tactics-are-companies-using-to-recruit-hires/?ftag=TREe01923b&bhid=40778246

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Newsletter Issue 189, September 2010

Sam Young Newsletter

Issue 189, September 2010

Hi guys,

What is the base-line for hiring staff these days? AMA surveyed US managers. Read on in Upping Our Game - 3Rs to 4Cs below.

Have a think about one word that sums up your profession. I consider consultancy in What's in a Word. 

PC Spring Clean   TLAs for SMEs        Tips, Short & Hot Keys        Hot Linx

Don't forget, if you want to be taken off my mailing list, click here to send me a reply e-mail and I will remove your name.

Upping Our Game  - 3Rs to 4Cs

In the US recently, the American Management Association surveyed over 2000 executives to define what "the 4 Cs"—critical thinking/problem solving, communication, collaboration, and creativity—were. These are the skills which all employees need to have as their baseline skill set in order to be hired. The resulting definitions were as follows:

• Critical thinking and problem solving—the ability to make decisions, solve problems, and take action as appropriate;
• Effective communication—the ability to synthesize and transmit your ideas both in written and oral formats;
• Collaboration and team building—the ability to work effectively with others, including those from diverse groups and with opposing points of view;
• Creativity and innovation—the ability to see what's NOT there and make something happen. (logon here for AMAs original article)

That's an interesting group of skills. And it is a far call from the basic three Rs—reading, writing and arithmetic—which previous generations were expected to have before departing on our employment journey. Those 3Rs are much further back down our collective employment skills tree. Ahead of them are computer literacy and media smarts. Then there's the 4Cs reaching out at the top.

80% of executives surveyed believe that proficiency in reading, writing, and arithmetic is not sufficient.

If we can assume that New Zealand managers are seeking the same skills as American managers (and I think we can), what I am wondering is whether Kiwi schools turn out graduates who can honestly fulfil that skill set. I really don't think we achieve this at secondary school level in New Zealand.

So does that mean that New Zealanders aren't job ready until they complete their first tertiary qualification?

I think that is a big "yes".

By NZQA's definition of level 7 education (year 3 of a bachelor's degree) graduates should have knowledge of a major discipline with areas of specialisation in depth, be able analyse, transform and evaluate abstract data and concepts, and be able to create appropriate responses to resolve given or contextual abstract problems. We should also be able to apply the theories we have learned in planning, resourcing and managing processes with complete accountability for determining, achieving and evaluating personal and/or group outcomes.

I think that sounds reasonably close to critical thinking, communication, collaboration and creativity.

Barro & Lee have some wonderful world statistics on global educational attainment which can be downloaded from their website at http://www.barrolee.com/. Their data shows that in New Zealand 49% of us have enrolled in tertiary study by age 25, with 24% of us having completed our study. We compare well globally; Australians are at 33 and 22% respectively; the US with 34 & 20%; the UK, 22 & 14%.

While it may be a big shock for those who think secondary school will be all the education they need, nearly half of us have already discovered it isn't so. We appear to have wised up faster than the rest of the world. And while our completion rate still needs work—with only half of us starting, finishing—more Kiwis have taken the tertiary education plunge than pretty much anywhere else on the planet.

That's hopeful for New Zealand's economy - the better educated we all are, the more likely we are to meet the 4C skill set, and find good employment.

So here's to growing all the entrepreneurs we need to hire those of us who have the 4Cs :-)

What's in a Word

In a recent LinkedIn update I subscribe to, I followed a thread attempting to determine one word that defined "Consultancy".

Many words were proposed. I thought about the submissions and mulled over the ideas that lay behind them.

"Wisdom" was considered, having the knowledge and experience to recommend and advise. However, the knowledge that implies is wonderful, but it doesn't necessarily imply practicality, or communication skills.

"Empathy" was proposed. Being empathetic may be useful, but I think that sometimes too much empathy can disadvantage a consultant; you too could get stuck in the same place that the client is already in.

"Listener" was suggested by several contributors. It is a great start, but that doesn't imply strategic thinking, planning and implementation.

"Brain" was suggested - the idea that you are an outside brain bought in to do some specific thinking for an organisation.

"Understanding", "Integrity", "Honesty" and "Trust" I felt were all base-line requirements for anyone that a client would hire; these weren't specialty consultancy skills.

Some were unusual, such as "Influencable", "swords" and "Prestige". I wouldn't have thought that any of these are really useful skills for a consultant!

But one really caught my eye. That was "COMPETENCE".

Competence is defined by www.answers.com as "the quality of being adequately or well qualified physically and intellectually" and "Physical, mental, financial, or legal power to perform". www.dictionary.net defines it as "The state of being competent; fitness; ability; adequacy; power", "Property or means sufficient for the necessaries and conveniences of life; sufficiency without excess" and as a legal definition as "(a) Legal capacity or qualifications; fitness; as, the competency of a witness or of a evidence. (b) Right or authority; legal power or capacity to take cognizance of a cause; as, the competence of a judge or court".

Competency is not a specialist consultancy skill. Anyone would want to hire someone that was competent; a person who could competently supply whatever it is that an organisation needs.

A consultant should be competent in whatever the specialty area is that they represent.

Competence. I like it.

 

If you are a LinkedIn member and want to follow the original thread, go to http://www.linkedin.com/groupItem?view=&srchtype=discussedNews&gid=40103&item=25033340&type=member&trk=EML_anet_qa_ttle-dDhOon0JumNFomgJt7dBpSBA .

PC Spring Clean

To speed up your PC, the best thing you can do is get rid of old files. There are a couple of things you can do regularly to clean out the old junk, and make it easier for your machine to find what it needs to operate, without having to wade through loads of stuff that is past its use-by date. For example, Anti Virus scans and Windows' indexing both take longer when they have many unnecessary files to process.

Some simple spring clean tasks you can do to improve your PC's health & speed are:

• Empty your recycle bin
• Delete old '$NtUninstall{xxx}$' files from XP's C:\Windows folder (these files can take up a lot of space, and you only need them when a Windows Update fails and your Operating System has to roll back the system. Keep the ones for the past six months, dump the rest)
• Think about paying to install a piece of application software like PC Pitstop's Optimize3. This is a great piece of software where if you run it before doing your system back-up, means your backup is free of all those temp files, and bits of left-over files from crashes and such-like. A very handy thing and well worth an investment.
• Then run Windows Disc Cleanup (Programs | Accessories | System Tools | Disk Cleanup)
• Run Windows Defrag (Programs | Accessories | System Tools | Disk Defragmenter)

Easy peasy.

TLAs for SMEs

Here are this newsletter's TLAs (Three Letter Acronyms) for you:

• WOBH, Whale Oil Beef Hooked. This is the name of the (in)famous Kiwi political-conspiracy blog at http://whaleoil.gotcha.co.nz/

Please feel free to email me with any TLAs that you want to get the bottom (meaning!) of.

Tips, Short+Hot Keys

Over the next few newsletters, we are going to look at all you can do with Function keys. This time it is F9:

• Access "Requery the underlying tables; in a subform, this requeries the underlying table for the subform only" Shift & F9
• Excel "Calculate all sheets in all open workbooks" F9
• Excel "Calculate all sheets in the active workbook" Ctrl & Alt & F9
• Excel "Calculate the active worksheet" Shift & F9
• Excel "Minimize the active workbook window" Ctrl & F9
• PowerPoint "Minimize the presentation window" Ctrl & F9
• Publisher "Move between the current page view and actual size view" F9
• Publisher "Move between the wizard pane and the publication" Ctrl & F9
• Windows Media Player "Decrease the volume" F9
• Word "Minimize the active document window or insert an empty field" Ctrl & F9
• Word "Run a Go To or Macro command from the field that displays the query results or do Field Click" Alt & Shift & F9
• Word "Toggle between a field code and its result" Shift & F9
• Word "Toggle showing Field Code results or codes" Alt & F9
• Word "Unlink a field or fields" Ctrl & Shift & F9
• Word "Update selected fields, or to Refresh when working with web pages" F9

Hot Linx

If you have had a prang in your car, then http://www.accidentsketch.com/ is the site for you to be able to draw out exactly what happened and download a pdf for your insurance company

In an effort to get Brits off the couch and into the outdoors, the UK's National Trust commissioned eco-arthouse CURB to create a campaign. Go to http://newslite.tv/2010/07/27/giant-grass-sofas-start-growin.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+newslite+%28news%3Alite.tv%29

There's a new-style gym that intends coming to your Kiwiland town, a direct import from Oz. Cheaper, open 7 days, 24 hours per day, with trans-tasman all-city membership. Check it out at http://www.jetts.com.au/. It will be interesting to see if it makes it.

There's a US company which specialises in - believe it or not - stick-ons for personal safety & hygiene. Check out their site at http://solutionsthatstick.com/pocksie-4/ and take a look at their products.

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                                Catch you again soon!! E-mail your suggestions to me here

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