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How much does a failed recruitment cost?

Don't just count the advertising costs of hiring a worker, but also the cost of the recruiter's hours and the cost of attrition during the probationary period. Among other things, this was the topic of a presentation at last week's recruiTECH. In the first part of our series on the recruitment conference, we also look at the role of selection time and employer branding.

When hiring a new employee, integration is a cardinal issue. Hunam Personnel Solutions Ltd., a recruitment consultancy, conducted a survey of nearly 50 HR managers working in a wide range of industries, including automotive, electronics, chemicals, food, logistics and IT. On average, these companies recruited 15-20 employees per year. They measured recruitment time, costs, take-up and exit costs. The responses showed a selection time of between 30 and 60 days - of course, in simpler jobs the position can be filled in less time, but in the IT sector in particular, the filling time was even longer than 90 days - said Tünde Farkas, managing director of Hunam.

Admission costs over one million forints

According to their aggregation, if we want to calculate the cost of an average position that can be filled in 45 days, we have to take the average time spent by a recruiter on search - if he or she spends 12 hours a week on search, that's 72 hours - which, calculated on the average salary in their position, means a wage cost of 450,000 HUF. On top of this, there are additional costs: advertising, database, interviewer manager, etc. All this adds up to an additional 733,000 HUF. A total of HUF 1.18 million for a single position, calculated on average.
The research shows that companies experience a 14% drop-out rate. The first reason for this is that the colleague accepts another more favourable offer, the second is that he stays in his original job - he uses the offer he received to get a pay rise in his original job - said Tünde Farkas.

Almost 2/3 of the companies surveyed have some kind of onboarding programme. These include, for example, welcome gifts, training, education and one-to-one meetings. But it takes more than these to integrate a colleague. 50% of companies with an onboarding programme employ a mentor, mainly a professional one, while some only employ buddies to carry out social integration. However, a much higher proportion of this would be needed, according to Hunam's CEO.

The exit of just one engineer costs 2.5 million HUF

In the first three months, 12% of people left voluntarily, mainly because the job was not what they expected. Sometimes they got a better offer from another company or for example found it difficult to get tot he workplace. They have found that this rate can be reduced, if proper information is given to new recruits. The cost of a lost worker - for example, a quality engineer with more than three years' experience, a basic salary of HUF 850,000, the cost of the exit, and the cost of the time of colleagues' involved in the process - was HUF 2.5 million. In the companies surveyed, the dismissal rate is 11.5% - this is due to inappropriate attitudes, professional non-compliance or not getting up to speed.

Based on the previous data, for an organisation of 20 employees, where a turnover rate is 23.5% (which means 5 employees who voluntarily leave or are dismissed) implies a cost of 11.4 million HUF . According to Tünde Farkas, to prevent this, we need to invest time and money in onboarding programmes. Invest energy in careful selection. Use an objective measuring tool in the selection process. And beyond that, you need an induction plan for the first few weeks of the new employee's employment, but don't let go even after that, it's very important to follow up the first three months," summarises the Hunam CEO.

What is the admission time?

It's worth clarifying the recruitment process, defining the terms and expectations between HR and senior management. This was the lesson of Eszter Klesitz, Site HR Manager at Valeo eAutomotive Hungary Kft., who illustrated with a case study from last year how to make the success of the recruitment area visible. Their company had 29 openings for engineers in various fields, but they were not able to present an entrant within the timeframe expected by the management. Although HR did a good job: they had accepted offers within 74 days of opening the positions. The fact that there were no new recruits was due to the notice period, which for engineers is 3-6 months. "In a conversation with senior management, we had to clarify that if management can tell the recruiting team 6 months in advance what kind of people they want to see and by when, we will be able to provide at least half of that by the expected time," said the recruiting manager. "The lesson is that you have to measure smart, you have to think beyond the numbers - added Eszter Klesitz.   

Employer branding is a team game, the whole company is involved

The claim that employer branding should be separated from product marketing is bullshit - this is the astonishing statement that Vanda Dénes, CEO of OpenOnline, began his presentation with. "In people's minds, we are Audi or we are Facebook. And the employee comes to us - to Audi in Győr or to Mercedes in Kecskemét - because we are those brands. They don't want to go into the car industry, they want to go to that particular company" - said the CEO, underlining her opening statement. In Vanda Dénes' view, it is a mistake if communication, marketing or HR departments do not work together, but in her experience sometimes even management and payroll are left out from employer branding.
Branding is a visceral feeling, an emotion, and that's why you need communication from many sides. Employer branding can also be measured by searches: you can see what kind of searches are coming to our careers page and if the number of searches for the brand is increasing there and not the number of searches for the position (in other words, if they are not looking for "SAP developer" but "SAP developer job at XY company"), then employer branding is strong.

The promise, the reputation that I radiate about myself must reach the best, the most talented. So we communicate our values to candidates with the most relevant information. We shouldn't think of talent branding only at the attraction point, because it is also a career path, an internal communication. We shouldn't just talk about jobs, we should try to show all the good things about our company - whether it's a Facebook or Linkedin series or other channel - but we should also remember to show what's happening. Don't think in terms of the old-fashioned ways - just showing career paths, ambassadors - show your real life. The goal is to build a positive community of employees who dare to declare that they work for our company. "We are who work for us." Everybody brings personality, talent, experience and that's what makes up our company, our value, and that's what we have to figure out how to communicate it to the outside world. These values will even motivate our employees in the long run. Employees can eventually become an "advertising surface". In one logistics company in Győr, a relatively expensive thermo sweater was given to the employees and the company became absolutely visible: people wore the blue sweater in the shopping centre, on the main street, in the cinema, because it was of such high quality. They got something that was useful to them and of value, and in return they felt valued and connected to the organisation.

Recruitment-marketing also means that one of our clients had guys who were anime fans, so we targeted people who were interested in the same thing. Not only will he fit in and work his way into the team sooner, but he will feel at home in an environment that is similar to him beyond his qualifications. These can be communicated inside the organization too, through newsletters, internal magazines. Employer branding is therefore a "long-term game", while recruitment marketing is a tactical move. If we combine employer branding, communication and our values, we can use these in the recruitment process.

You can read the original article in Hungarian here.

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