Month: December 2020

According to the Harvard Business Review, hiring talent for job openings remains the number one concern of CEOs in the most recent Conference Board Annual Survey: it is also the top concern of the entire executive position. PwC’s 2017 CEO survey reports that chief executives view the unavailability of talent and skills as the biggest threat to their business.

Survey after survey finds employers complaining about how difficult hiring is, although clearly, they are hiring much more compared to any other time in modern history.

In the era of lifetime employment, from the end of World War II through the 1970s, corporations filled roughly 90% of their vacancies through promotions and lateral assignments. Today the figure is a third or less. Openings are now filled more often by hiring from the outside than by promoting from within.

Now companies must be good at recruiting and promoting across many channels, because the candidates they want are already doing the job somewhere else. These people come with the required experience and skill sets, so do not need much training, they are usually ready to contribute right away, but they are much harder to find.

The Technology Rabbit Hole.

It is ironic that technology is making hiring for Information Technology more challenging.

Recruitment and hiring, managers trying to fill open positions are largely left to figure out what skills and experience the jobs require and what the ads should say. When applications come—always electronically—applicant-tracking software sifts through them for key words that the hiring managers want to see. Then the process moves into the Wild West, where a new industry of vendors offer an astonishing array of smart-sounding tools that claim to predict who will be a good hire. They use voice recognition, body language, clues on social media, and especially machine learning algorithms—everything but tea leaves. Entire publications are devoted to what these vendors are doing.

The big problem with all these new practices is that it has yet to be determined whether they actually produce satisfactory hires. Only about a third of U.S. companies report that they monitor whether their hiring practices lead to good employees; few of them do so carefully, and only a minority even track cost per hire and time to hire.

Monetary

• The U.S. Department of Labor says the cost of a bad hire can reach up to 30 percent of the employee’s first-year earnings.
• The Undercover Recruiter reports bad hires can cost $240,000 in expenses. Those are broken down into costs related to hiring, pay and retention.
• CareerBuilder says 74 percent of companies who made a poor hire lost an average of $14,900 per poor hire.

Opportunity

While much harder to quantify than direct monetary costs, opportunity costs can be substantial when they are added up. Opportunity costs represent the potential benefits a business misses out on when choosing one hire over another. The idea of opportunity costs is a major concept in economics.

Because they are unseen, opportunity costs can be easily overlooked if one is not careful. Understanding the potential missed opportunities foregone by choosing one hire over another allows for better decision-making.

While financial reports do not show opportunity costs, business owners often use the concept to make educated decisions when they have multiple options before them. Training and onboarding the bad hire for instance, is an example of opportunity costs. Not only are these sunk costs not recoverable they have to be weighed against the lost productivity that the right hire would have produced.

KEY TAKEAWAYS

• Opportunity cost is the forgone benefit that would have been derived by an option not chosen.
• To properly evaluate opportunity costs, the costs and benefits of every option available must be considered and weighed against the others.
• Considering the value of opportunity costs can guide individuals and organizations to more profitable decision-making.

Motivation

There are other forms of loss that can be associated with a bad hiring decision according to People Matters. For instance: motivation. A bad hire can have a negative impact on co-workers and the team as a whole. If the bad hire is in a leadership position, the impact can be much worse. Direct reports will start to resent the leader. Eventually, those employees who have proven to be some of the best workers/high performers will start to disengage from the team and the organization. Self-motivation often relies on environmental factors. If the environment is negative, it can be very difficult to be motivated at work.

Productivity

Motivation can directly impact the productivity of an employee or team. A bad hire, in most cases, can make it difficult for a team to meet their goals. That’s because a co-worker or team will be hesitant to work with the bad hire and vice versa. The bad hire simply may not want to work with the other team members and thus will do whatever is needed to get out of the work.

Reputation

It’s difficult to weigh which loss yields a higher negative impact on the company. That said, reputation is probably the more difficult one to overcome. In the internet age, job seekers are accustomed to looking at websites that offer employee-led company ratings and/or anonymous feedback sites. A bad hire can sow discontent from these websites. Candidates researching particular companies where this has taken place may move away from the organization. And it’s not just job seekers. Current employees often review these websites as well. Those employees could begin to develop negative feelings about the organization and may begin to distance themselves and, ultimately, look for a new company for which to work.

Rebuilding a company reputation under these circumstances can be an uphill battle.

Summary

No one wants a bad hire, especially when offering someone a job is such a momentous occasion for the organization and the employee. The way forward is really about where the focus lies when hiring anyone for any position. HR or hiring managers need to focus less on college degrees and experience and focus more on ‘fit’. Does the candidate have the qualities the organization is looking for and does he or she embody the company culture and values? When hiring from that perspective, HR will see fewer poor hires and more brilliant ones.

“In the midst of crisis, lies great opportunity”

Covid-19 has changed the world in virtually way imaginable. Businesses that require consumers to be in the same place at the same time such as Tourism, Hospitality, and Sporting Events will be changed permanently, others will carry on, but forever be reconfigured.

Restaurants, bars, offices, and gyms are largely empty as millions stay home to halt the spread of the coronavirus. That has created new opportunities for several companies.

• Nintendo reported its annual profit surged 41 per cent, its highest in nine years. And profit in the first three months of 2020 more than tripled compared with the previous quarter.
• Peloton has led the trend in IoT connected home fitness equipment, including bikes and treadmills. Unsurprisingly, it reported a blowout 2020 Q1: Revenue grew 66 per cent and membership for its app rose 30 per cent. The company, which has a loyal following, also raised its full year forecast because it does not expect demand to decline anytime soon.
• With many people now working from home and the trend showing no sign of slowing down, Wayfair’s sales for its most recent quarter increased 20 per cent compared with the same period last year. The online retailer said it is seeing “strong acceleration in new and repeat customer orders,” with the number of orders growing 21 per cent to 9.9 million.
• Rival Overstock also said that its April retail sales were up 120 per cent compared to the same month last year, with growth occurring in its “key home furnishings categories.”
• Zoom, a video conferencing tool, has clearly been the biggest brand to break out. The company hosts 300 million meeting participants a day, according to CEO Eric Yuan. Zoom previously said it crossed 200 million daily meeting participants in March. Its stock is up 120 per cent for the year.

With the Pandemic showing no signs of slowing down, these businesses are likely to continue their upward trajectory. What do these businesses have in common?

They are driven by technology.

Add to this environment the growing acceptance of companies that remote workforces can be just as productive and the continuing proliferation of the “Gig Economy”, these are fertile times for skilled IT knowledge workers.

In this dynamic environment the best career move is to be savvy. You need a firm that is connected and experienced so you can capture the opportunities when they present themselves.

Ambassador Solutions has over 30 years experience of matching great talent to great opportunities, with a business model that is no-risk for talent or employers.