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What is the Cost of a Hiring Delay?

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Human resources departments have been on a mission to accelerate their hiring. There once was a time when plodding, deliberate processes were considered an advantage—surely deep rumination on each candidate’s potential would lead to the best outcome, right?—but today there is a need for speed.

As of last year, 86% of recruiters and 62% of employers felt the labor market had become candidate driven, and job hunters want to land a position as quickly as possible. Top candidates are now available for only 10 days before getting hired.

Think about that timeframe: You get the résumé or application and take a day or two to review it. You interview several people and then meet internally to decide on the best candidate. You might be sitting at Day 8 or Day 9 of your own process by the time you’re making a conditional offer, and the candidate may already be further along with other companies.
Time is of the essence. If the background check takes too long, “your” candidate could be gone. What’s the impact of losing out?

Return on Investment and Sunk Recruitment Costs

A survey by the Society for Human Resource Management found that companies’ average cost for one hire was over $4,000. This cross-industry estimate masks some significant differences. Entry-level service jobs often cost about $1,000 to fill but competitive positions in a professional setting commonly hit the $5,000 level and beyond.

Organizations naturally want to see a high return on their recruitment spend, especially since most of these expenses are sunk costs that cannot be recouped.

Losing the top candidate reduces ROI, because you’re taking a second or third choice rather than the best one. And although the hiring process itself isn’t fully derailed by missing out on one individual, moving down the list can raise costs. For example, it eats up more HR time to make new offers and run new background checks.
In worst case scenarios, slow hiring can require an organization to relaunch the search process entirely, just to find a new pool of candidates who are still in the job hunt. This means more advertising, recruiter, and HR costs and could double total outlays to fill the position.

Raising the Cost to Hire

Other issues come up when background checks stretch over days. Great candidates are of interest to numerous organizations, so you’re giving them time to interview elsewhere and collect offers. The chance they receive a competing offer rises as the clock ticks, so you could end up bidding on the individual to overcome a more lucrative opportunity they’ve since identified.

Some recruiters estimate the salary difference in snagging a candidate before there is competition could be as much as 25 percent! And that’s a compensation price hike the company will absorb every year of the employee’s tenure.

The Non-Financial Costs

The longer a position stays open, the more company productivity is affected. Staff can generally pitch in for a short while to cover, but there comes a point at which the organization starts to stumble. This can affect employees and customers.

Finally, organizations should consider the cost to their reputations. Employers are vying to be rated “a great place to work.” Giving the wrong impression to candidates can dull enthusiasm about the organization, and word spreads. Having a seamless hiring process from the initial contact through the background check and onboarding process, on the other hand, helps ensure great people come knocking on your door any time you have an opening.

If you want more information about upgrading your background check capabilities and integrating them with your existing human resources technologies, contact us. We can walk you through the options and discuss how we shave time off the process and position our clients to access the top candidates.

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