Recruitment rates rise, but employers should be careful who they hire

There is mixed news on the recruitment front, with the latest Recruitment and Employment Confederation (REC) and KPMG report on jobs hinting a positive turn, with permanent placements accelerating, the rate of demand for permanent staff remaining solid and average starting salaries continuing to rise. However, according to a new global report, employers are urged to be cautious about who they hire, because more than half of employers in each of the ten largest world economies say that a bad hire has negatively impacted their business, pointing to a significant loss in revenue or productivity or challenges with employee morale and client relations.

The survey by global human capital solutions company CareerBuilder reveals that hiring someone who turned out not to be a good fit for the job or did not perform it well can have serious implications, with for example 27 per cent of U.S. employers reporting a single bad hire cost more than $50,000, while in the U.K., 27 per cent of companies said a bad hire cost more than £50,000.

“Making a wrong decision regarding a hire can have several adverse consequences across an organization,” said Matt Ferguson, CEO of CareerBuilder. “When you add up missed sales opportunities, strained client and employee relations, potential legal issues and resources to hire and train candidates, the cost can be considerable. Employers are taking longer to extend offers post-recession as they assess whether a candidate really is the best fit for the job and their company culture.”

In the Eurozone, bad hires were most expensive in Germany, with 29 per cent reporting costs of 50,000 euros or more. Three in ten Indian employers (29 per cent) reported the average bad hire cost more than 2 million Indian rupees ($37,150), and nearly half of surveyed employers in China (48 per cent) reported costs exceeding 300,000 CNY ($48,734).

The BRIC countries (Brazil, Russia, India and China) were generally more likely to report a variety of negative effects tied to a bad hire such as productivity and revenue losses while U.S. ranked high in citing an impact on employee morale and cost to recruit and train another worker. European countries ranked lower in almost every category, which may in part be attributed to slower hiring in those markets.

The global survey, conducted online by Harris Interactive^© from November 1 to November 30, 2012, included more than 6,000 hiring managers and human resource professionals in countries with the largest gross domestic product.