Although getting the 'right people' is the key to running a successful municipality, every municipal manager knows that when it comes to hiring, finding those people can be a difficult and protracted process.
In his classic book, Good to Great, Jim Collins says, "...
to build a successful organization and team you must get the right people on the bus." His research shows that great companies and organizations do this. They get the right people and put them in the right seats.
But I've been asking myself a question lately - one that his book does not address. What's the true cost of hiring the wrong people, and what steps can you take to avoid such mistakes? Finding the right person, with the right skills, who is right for your municipality, as well as a good match to your corporate 'DNA', is crucial to keeping the organization moving in the right direction. Hiring the wrong person can be a disaster - and a costly one at that!
The true cost of hiring the wrong person is a much-debated subject. Who could even begin to count the cost of the lasting damage caused to a team, department or even an entire municipality? Aside from the immediate and real cost of the hiring mistake and resulting dismissal, there's the expense of having to do it all over again. A hiring mistake can affect morale, service attitude, service delivery, and, of course, elections. These basic costs are often multiplied, depending on the seniority of the person concerned. Further, there are nearly always unintended effects when disillusioned team members also leave.
Estimates of the true cost of a hiring mistake vary. A quick Google search of recent thoughts on the subject suggests that two times the annual salary of the individual is a good place to start. The Chartered Institute of Personnel and Development (CIPD) estimates two-and-a-half times the salary. The Harvard Business School says it can be between three and five times the salary, and up to ten times for very senior or specialist positions.
Obviously, some of the costs can be measured quite easily. Initial recruiting costs, a period of wasted salary and benefits, any training costs, plus a severance package are very real, as is the cost of going through the hiring process all over again. Then there is the cost of management time, lost service, (in some cases) lawsuits - and, of course, lost votes.
All of these can be listed in the "that was very costly" column. But what about the less tangible costs? What price can you put on the damage to your municipality's name or reputation as an employer? On top of that, if other people from the 'damaged' department leave, can you also chalk those costs up to the original "hiring mistake"? Trying to determine the financial implications can make your head spin. If the right person had been hired in the first place, what impact might that person have had from the beginning, and how much better off might you be now?
Hiring the wrong person is a mistake that happens all too easily and all too often. These mistakes can happen for a number of reasons. Everything from poorly completed reference checking (references that would verify both experience and skill sets), to a disregard for personality as well as a candidate's attitude, skills and knowledge (to determine cultural fit) can contribute to a faulty decision. In the majority of cases, a straightforward investment in the recruitment process is enough to avoid a potential disaster. This is one reason why we created the A.S.K. Selection Tool™
Often overlooked is the fact that people are an asset to a municipality, just like an IT system or road grader. Nonetheless, even though many municipaliti
es cheerfully use the phrase "our people are our greatest asset", they don't cheerfully invest in a hiring process in the same way they would for road equipment, or even training for existing staff
NEVER AGAIN!
I know a Director of Finance who made the following comment:
"I would never dream of spending $400,000 of my city's money without having numerous meetings with stakeholders to outline the reasons for the expenditure, the process of how the money will be spent, and the metrics associated with the outcome. But, with recruiting, we don't give it any thought. We just say we have a job opening - go fill it. I won't ever do this again."
Of course, there is a cost to retain a professional recruiter like Ravenhill Group ... but before you decide to throw an ad in the paper and do it yourself, you really need to ask yourself: "What is the true cost of hiring the wrong person?"
You Do The Math
Take a moment and think about a "hiring mistake" your municipality has made. I have provided a brief list of both tangible and intangible factors that affect the cost of making a bad hiring descision. As you go through the list try to estimate the cost of each factor, and then add it all up. The factors used are as follows:
Tangible factors: recruiting costs such as fees and advertising, salary, benefits, management time, training costs, overhead, lost productivity and lawsuits.
Intangible factors: damaged reputaion, loss of goodwill, low staff morale, turnover, loss of other qualified candidates, unfinished municipal projects and reduced productivity,
For those who think that the fees of a professional recruiter aren't worth it have a look at this Hiring Mistake Calculator. I think you'll change your mind in a hurry! When you do, why not give me a call!
Bruce 1-877-830-0500 ext 727
