You already know that it’s absolutely essential to find the right people for your business.
It’s no secret, however, that in today’s job market many companies are finding it more difficult than ever to find – and even harder, retain – good employees. It’s harder and harder to come by people with the right skills, and the ones who are available do not last long.
Investing in the wrong people can be devastating for your company. Businesses are losing record amounts of money by investing in the wrong people – Forbes estimates that the cost of a bad employee is around 30% of their salary. For smaller companies especially, this loss of thousands of dollars can be devastating. Tony Hsieh, CEO of Zappos, estimates that bad employees have cost his company an estimated 100 MILLION dollars – and that is from a company that literally pays people to quit to assure that they have the best people who actually want to be there.
Why is hiring like this?
For years, an emphasis on “white collar” career paths and secondary education has pushed more and more young people away from trade schools and technical careers. However, these “blue collar” job opportunities, most of which cannot be outsourced, have not gone away. You can’t ship your car to China to get fixed, and a mechanic in India is not going to fix your factory’s machines.
In fact, as more of the workforce retires and companies continue to grow with the economy, many of these jobs go unfilled. These vacant positions hold back growth and damage productivity, causing employers to lose thousands of dollars per year.
So what can we do?
Local initiatives, government programs, and nonprofits have done what they can to reignite an interest in the trades among young people by showing them that they do have other choices aside from “college or no college” after high school. Organizations like the Regional Manufacturing Institute hold job fairs and conferences to discuss and find solutions to the employment problem.
Employers are trying various tactics as well. Besides simply raising pay rates, some are getting ahead of the curve by learning that people aren’t motivated by money alone. Some companies are beginning to emphasize work culture, offering employees perks like flexible schedules and competitive benefits. Pay is important for job satisfaction, but there are many more factors that we are just now learning to pay attention to.
The evidence to support these alternative employee retention tactics is overwhelming.
Economist Dan Ariely, author of Predictably Irrational and Payoff, has found a few things that are just as important to people as pay raises :
- Rewarding work – Employees like to feel that they are utilized well and valued for their skills, as well as making a difference or helping people in some way.
- Trust – Employees need rules but don’t want to feel micromanaged or beaten down.
- Challenging work – People want to be able to take pride in their work and continually feel like they are getting better at something.
- Effective bonuses – Doing bonuses wrong can just feel like bribes for mediocre work. Creative bonuses, like goods, services, or retirement/education funds are far more effective than simply giving someone cash.
Check out his full video on the subject at TED.com.
The equation is simple.
It’s hard to find good people these days, so it’s equally important to FIND good people as it is to KEEP them. As the true cost of a bad hire can be devastating to both the productivity and morale of a company, it’s essential that employers not only pay attention to keeping their good employees (see above), but also that they get creative with finding the best people to begin with.
Simple strategies like checking references and a more intensive interview process can be helpful. Additionally, setting clear and honest expectations is essential to find the right fit – better to find out any issues now than later!
Many of the most successful employers are turning to third parties to help with hiring – staffing and recruiting services and consultation are becoming increasingly popular and effective. At SIS, for example, employees are guaranteed (meaning they are replaced for free) during their initial work period, often 2-6 months. This is a great way to really see whether employees are going to be a good fit or not.
When you factor in the cost of HR, onboarding and training, job boards, background and drug checks, career events, etc. an employee making $45,000 a year can cost almost $70,000 to hire for their first year. With this in mind, reducing risk by using a staffing or recruiting agency may be in your best interests.
After all, isn’t it better to date someone BEFORE you get married?
Not every staffing service is going to be a good fit for every company, however. Many have different areas of expertise and work with different qualities of candidates.
To get a free consultation, contact us here and someone will reach out to you within 24 hours.
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