It's not unheard of for companies to be paying millions for employees who don't perform.
HR managers estimate that bad hires have cost their companies "thousands of Rands," but realistically that's a fairly conservative view. US based company Zappos CEO Tony Hsieh once estimated bad hires had cost the company "well over $100 million."
Nowhere is this more apparent than the South African context where it’s not unheard of for companies to be paying millions for employees who don’t perform. I trust we need not mention names beyond Eskom to illustrate this example. Such a scenario is somewhat tragically ironic in a country with wide scale retrenchments and an unemployment rate that hovers around 29%.
The cost of a bad hire or even an ill fitted one isn’t merely illustrated in the recruitment cost of the employee. It also isn’t confined to training of the employee. The exponential cost implications come as a result of disengagement that begins to affect culture and other employees
Consider the exponential nature of disengagement
When disengaged employees don’t pull their weight, good employees get burnt out trying to make up for it. At their worst disengaged employees impact the culture of an organisation spreading bad habits such as non-performance, tardiness and negative talk. This can impact the business to such an extent that is begins to result in the loss of other employees.
Just as the ill effect of disengaged employees spreads throughout the organisation, so too can it be said that the value created by engaged employees is exponential. Not only do engaged employees generally seek to deliver value within their respective role, but also seek to employ creative problem solving for the organisation in general. This naturally begs the question of how does one attract the right talent?
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The new frontier
It’s been fifty years since a man stepped foot on the moon and now, we hear that TESLA and the likes are looking to MARS as a potential and alternative habitat. For new frontiers, both MARS and others, we need people with the skills to make the impossible possible. What’s needed are not traditional skills but skills to manage complexity, diversity and to perceive a new reality. Ironically what’s most in demand in the 4th Industrial Revolution are quintessentially human skills; complex problem solving, empathy, leadership, curiosity, optimism, agility and the ability to collaborate.
In this light, whilst technology has created value and ease for recruiters, it’s also made it easier to make mistakes. Whereas technology has enabled choice at the click of a button, it’s still essential to ensure a genuine cultural fit which means investment in human interaction and process.
Whilst South Africa needs to take a serious look at its recruitment crisis, in these challenging economic times, so too do organisations need to relook at their recruitment process. If new employees are not the right fit, the opportunity cost isn’t just delivery on role requirements but includes value creation for the organisation as a whole.
Advice for South African organisations
The biggest cost saver is to work with an organisation who understands the coalface of industry, and the critical need to identify and meaningfully test the applicant in terms of culture through one-on-one needs analysis. Testing experience is one thing, understanding skills required is another, but ensuring an integral cultural fit is what makes the difference in long term success. In addition, organisations need to work with a partner to ensure comprehensive research to source quality candidates that may not necessarily be searchable i.e. candidates who are IN the market but not necessarily on the market. At this critical time in our history, instead of making multiple mistakes, taking time to find the right fit is what’s needed to solve the challenges of the Organisation, deliver on the future and indeed to positively impact our country.
