Hiring blunders 'costing UK plc billions'

The mistakes that HR and other hirers commonly make when recruiting have been laid bare in a new report, estimating just one such blunder at mid-manager level to cost £132,000.

In a stage-by-stage litany of hiring errors, the Recruitment & Employment Confederation said the first mistakes occur early on, when the need for talent is first identified and the role defined.

An "inadequate" time period is spent at this stage reviewing the needs of the hiring outfit, the REC said in its report, based on an April poll of 500 HR staff and interviews with agency bosses.

But hinting that the recruiting officer is not the only one at fault, the confederation said the provided job profile can be “misleading,” or the focus wrongly on "competencies instead of potential."


At hiring stage two, when the focus moves to enticing candidates, a too small pool of talent is accessed; language used in job adverts can be “biased” and a “limited budget” may restrain the search.

The talent pool being overly narrow is significant. In fact, among outfits that used an agency (not all the surveyed HR officers did), it was the most common reason that led to a ‘bad hire.’

The chunk of officers not liking the depth or breadth of the candidate pool -- and tracing it to the reason they landed a dud candidate -- increases to almost half at large businesses.

But the next stage, trying to create an “appropriate” selection process, is fraught with even more potential cock-ups; four in total -- more than at any other stage of recruitment.


As HR wants to fill the role quickly (mistake one), skills or references go unverified (mistake two), improper interviewing skills can creep in (mistake three), as can “unconscious biases” (mistake four).  

These are the final blunders potentially affecting contractors, as at stage four -- ‘making the appointment and beyond’ -- the typical errors are a lack of provision in terms of both training/integration and career motivation.

Nonetheless, enough of the hiring mistakes seem to almost guarantee the end-user outfit gets saddled with the unenviable bad hire. Although the report does not define such a misfit, the REC reflected:

“The direct, tangible costs of a bad hire include the staff time wasted and the company money wasted on finding and hiring a candidate.

“For some bad hires there are wider implications. The candidate may be dissatisfied with or unsuited to the role, or may even become disruptive at the workplace.”

'Knock-on effect'

Energy firm Innogy, featurd in the report, added: “The impact on the business directly in terms of that individual [bad hire’s] performance and their ability to make a positive contribution [are key].

“So if they’re not the right fit for that organisation and don’t have the right skills, there is a knock-on effect on the wider team around them… [who] may even be doing the work of that individual”.

As to how to head-off bad hires, the REC recommends being “proactive, not reactive.”

So HR decision-makers should “recognise and calculate how much a bad hire really costs the business -- this will give you the impetus to strive to be more rigorous in future selection processes.”


The confederation also advises: “Be confident in recognising hiring mistakes made in the past and aim to rectify these through improved recruitment...One must learn from past hiring mistakes in order to get it right in the future.”

The report, Perfect match: Making the right hire and the cost of getting it wrong, does not specify the total cost to businesses of hiring’ blunders, but it cites one bad hire of a mid-manager level earning £42,000 a year as costing the end-client £132,00.

On this basis, and in light of the report finding two in five roles to not contain “the right person,” the REC estimated the hiring mistakes to be costing UK employers “billions each year.”

But the assessment is conservative, because the report says the calculations used relate to permanent staff only, meaning ‘the billions’ estimate would increase once contractors and other temporary workers are factored in.

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Written by Simon Moore

Simon writes impartial news and engaging features for the contractor industry, covering, IR35, the loan charge and general tax and legislation.
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