In theory, Artificial Intelligence (A.I.) gives companies the ability to pass human recruiting tasks on to automated tools. Not only does this delegate the prescreening process to a robot, it can also prevent would-be candidates from even becoming applicants. This...
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Most everyone is familiar with the fun, “crazy” culture at famous tech companies like Google and Facebook. Napping pods, comfy lounge spaces, game rooms, free food, and putting greens are certainly a diversion from most corporate environments. It’s common for startups to take a new approach, after all, there are certain risks associated with being different that commonly pay off. There are times, however, when this is not the case.
In early February, CEO and founder of Zenefits, Parker Conrad, resigned from his position at the Human Resources software startup. The underlying cause? According to newly appointed CEO, well-known Silicon Valley entrepreneur, David Sacks, “Our culture and tone have been inappropriate for a highly regulated company.”
Recruiting has changed. The advent of so many startups, a new generation of workers, social media and technology, have all changed the game. Not only has the way we go about crafting job descriptions and posting roles changed, but even the start of the recruiting phase now begins well before a position is actually open. With everything that is evolving within talent acquisition, what hasn’t changed is that better recruiting leads to lower turnover and a lower cost per hire.
Consequences of a Bad Hire – Beyond Turnover Cost
This recent study shows the average cost per hire to be at $4,000. But what is the turnover cost per hire if they’re bad hires? Turnover costs are estimated to be one-third of a new hire’s annual salary or more in order to replace them. However, the consequences of making a bad hire go beyond this. There are other costs as well, such as reduced morale among employees, disruption to a department, slower production, an increased workload, and depending on their position, the potential of lost sales or customers.
There are a whole host of factors that contribute to employee turnover; boredom, low pay, lack of recognition, limited advancement opportunities, dissatisfaction with management. However, one of the largest reasons for high turnover, 80% according to a statistic by The Harvard Business Review, is due to making a poor hiring decision in the first place.