It goes without saying that talented employees are the biggest asset of any business. What many employers are afraid to openly say, however, is that hiring them is also one of your biggest challenges and can turn into an expense that doesn’t always deliver ROI.

There’s no denying it: hiring employees can be costly. Recruiting for each newly created role costs anywhere between £5,000 and £20,000+ for professionals at junior and middle management level. For senior management this can be significantly more. Even more startling, replacing an existing member of staff costs some £30,000.

It’s often not fully appreciated just how negative an effect a bad hiring process can have on overall business profitability. A good hire may seem expensive to recruit, but a bad hire continues to accrue cost even after recruitment. In fact, research shows that 41% of businesses lose more than £16,000 on a single poor hire.

Smarter hiring strategies go hand in hand with increased financial success. With that in mind, here’s a guide to increasing your business profitability via the hiring process.

The typical hiring process

When it comes to hiring, most businesses adhere to a fairly traditional procedure. They’ll identify the vacancy, post a job description, review CVs, conduct generic interviews, check references and then hire the best of the bunch.

This system can work well when there are an abundance of active quality candidates on the market, but is flawed in the current climate where everyone is fighting for the same talent. Ad-hoc hiring often results in poor productivity and poor retention rates. On average, 23% of new hires leave their job within the first year, and 1 in 3 fail to meet their employer’s productivity expectations – figures which are undoubtedly the result of using a basic hiring process.

To recruit employees who will facilitate growth and profitability, you need to get strategic and make your hiring process tight, tailored and well thought-out. Posting a vague job description and hiring off the back of a standard interview is inevitably going to hit you in the wallet fairly soon along the line.

The impact of poor hiring

A poor hiring process will hurt your entire business, not just your finances. You’ve invested time and money in making that new hire, and this investment only increases as time progresses. If you’ve made a bad hire off the back off your process, the first thing you’ll see is a productivity dip.

According to a recent survey, Chief Financial Officers say that supervisors spend 17% of their time (almost one day per week) managing poorly performing employees. That time lost makes your business less competitive, creates a slower time to market and results in an output drop. In fact, hiring managers confess that a bad hire directly costs them productivity. Your team have to fill the deficit created by an ill-fitting hire, putting a strain on resources and slowing pace.

As well as this decrease in productivity, you’ll also see a decrease in morale. In research conducted within a finance team, 95% of financial executives said that making a bad hire affects the morale of the team. Tensions are created when able employees are left to struggle with the errors and low output of incompetent employees. New employees placed in the bottom quarter for that position produce anywhere between 25% and 600% less than top performers in the same role. These top performers will feel stress and potentially resentment, resulting once more in a lower work output.

So, internally, a bad hiring process has cost you time, money, productivity and morale. Unfortunately, that’s not the end. You’ll also be hit hard when it comes to your dealings with customers.

Hiring a subpar employee measurably reduces sales and customer satisfaction, which in turn will increase your customer turnover. Even if you’re not hiring for a customer-facing role, a bad hire will result in lost agility when it comes to creating client solutions.

Then there’s the increased risk of legal issues, the damage done to your personal reputation, the costs of training, termination and further recruitment…the list is extensive.

Your hiring process hits all touch-points of the business and is a huge, often unsung component of profitability. To save the severe blow to your company finances, there are several crucial steps you should take to smarten the way you hire.

The art of the job description

Thinking with the end in mind and deciding precisely what shape you want the role to take should always be the first stage in a strategic hiring process.

The most talented candidates in the job market will add value to your business and increase your profitability. You won’t get these kind of skilled employees without an accurate, explanatory job description.

With the average cost of advertising a single new role standing at a pricey £398, it’s worth getting this right. Clearly defining the job and position requirements will not only put off unsuitable candidates from applying, it will also allow you to evaluate each candidate fairly to determine who is the best fit.

Get social

Social media is a melting pot of talent that contains 99% of candidates, as well as being a free platform. Despite this, only 23% of employers use social media in the hiring process. If you want to boost your business profitability, start using social media as the valuable employment resource that it is.

For employers, the beauty of social media is that is can function as a completely free screening tool prior to conducting your candidate interviews. In a recent recruitment survey, 44% of respondents stated that leveraging social media improves candidate quality over those using only traditional techniques such as phone screening and CV filtering.

With social media, you’ll be able to access a broad range of information about the candidate, not just their skills and experience. You can have a glimpse into their personality, seeing snippets of their lifestyle, sense of humour and values. In turn, this will allow you to assess cultural fit at an early stage, saving you from wasting time interviewing candidates whose values make them unsuitable.

Utilise the power of the interview

A staggering 58% of people are in the wrong job. From a recruiter’s perspective, this figure would be nowhere near as high if employers used a more comprehensive interview process when hiring. The interview process is the most critical step in acquiring a great, growth-driving hire. With that in mind, your interviews need to be as structured as the hiring process you’re building.

Employers should always prepare tailored questions in advance of the interview, weigh them based on importance and use the same set for each candidate. Don’t waste  valuable time and resources by asking silly questions such as “If you were an animal, what animal would you be?” Similarly, don’t ask close-ended questions that won’t elicit thoughtful responses. By using a more structured technique, you’ll ensure that you’re creating a consistent approach across the interview process with refined, relevant questions.

Alongside the interview, use a hiring scorecard and take note of key elements such as certifications, training and attitude to give yourself a useful frame of comparison. The blend of consistency and specificity that comes with a structured interview enables employers to accurately compare a host of competitive candidates. Applicants will have been asked the  same questions that test their suitability for the particular position. They’ll be on equal footing and their answers will allow you to accurately determine who will add the most value to the business.

Be a cultural hirer

With 89% of people leaving a job due to unhappiness, businesses are facing an epidemic of unfulfilled employees, resulting in high staff turnover and drained finances. Behind this epidemic is poor cultural hiring.

Skills can be picked up but attitude and personality is set. If you want to optimise your hiring process for profitability, you need to stress cultural fit.  Hiring based on a candidate’s personal attitude over their professional attributes results in the creation of a team with greatly reduced interpersonal friction. You’ll have people on board who will embrace the company’s growth journey and be a strong fit with regards to overall business values.

Identifying the talent that fits culturally within your business is a huge leap towards improved employee engagement, satisfaction and long-term retention. With a healthy, happy team all in alignment with each other and with company goals, you’ll win the war for talent, engage your staff, save a significant amount of money on re-recruiting and get continuous ROI from your hire.

Implement a solid onboarding procedure

Your new hire has been expensive to recruit and it’s essential to keep and cultivate them. Due to the fact that you won’t be receiving usual ROI until 7-8 months (the time it takes a new employee to reach peak productivity), it’s important that your hire becomes a long-term financial investment.

A strong onboarding procedure is absolutely core to this. It doesn’t start on day one, nor does it stop there. Your onboarding plan should start last from the moment you first get in to contact with the candidate and end only when they’re firmly established in the role. An onboarding plan should ensconce the new hire within the business, making them familiar with overall goals as well as offering them the support they need to grow. With a strong onboarding process, you’ll get ROI quicker, ramp up retention rates and prevent future recruitment expenditure.

Business rewards

Taking the steps above and refining your hiring process will, of course, boost your business profitability. But it will also make your company smarter, stronger and more competitive. You’ll see far-reaching benefits, including:

• Talent that will add value to your business and fuel growth
• Higher employee engagement, fulfilment and retention
• Smarter solutions, meaning more satisfied customers
• A brand greatly strengthened by the quality of its team and their output
• Efficient working, resulting in increased productivity and a quicker time to market

With everything else to worry about in a business, the hiring process is often forgotten as a significant company overhead. Too frequently, hiring is treated in an ad-hoc manner, therein becoming a huge financial drain over and over again.

Acquiring and keeping hot talent is a sure-fire way to grow any business. But to do so, you need to wise up when it comes to employing and stop throwing your company’s money away with poor processes. Your profitably will increase and with the right talent on board, your business will go on to create brand magic.