SMEsí 69million recruitment waste

According to research from Jobsite.co.uk:

British Small and Medium Enterprises (SMEs) waste 69 million on poor recruitment decisions every year
22 per cent of new recruits or 55,000 new employees leave their job within the first six months

Hiring the wrong staff is costing British Small and Medium Enterprises (SMEs) a wasteful 69 million each year, new analysis from Jobsite.co.uk reveals.1

The countryís small and medium businesses invest 300 million a year in hiring 250,000 employees.2 However, not finding the right staff first time around is costing them dear, as one in five new hires (22 per cent) leave within six months of starting.3

Many SMEs are therefore having to pay to recruit for the same position twice within 12 months, at an average cost of 1,200 a time.4

Although online tools can broaden small firmsí reach considerably, few SMEs appear to be using them, with only a quarter (25 per cent) using internet jobs boards, for instance.5 But as 80 per cent of jobhunters use the internet as their first port of call when looking for vacancies,6 this may explain why one in four small businesses (27 per cent) cite a lack of suitable candidates as the main obstacle to successful recruitment.7

However, financial waste through poor decision making is not the only problem facing small businesses. As 99 per cent of SMEs have fewer than 50 employees, losing just one or two people within a year can cause major disruption, with research showing that more than 70 per cent of bosses believe employee departures have a negative effect on business performance.8

Keith Potts, MD of Jobsite.co.uk, commented: ìFor any business, saving time and money is important. This is doubly so for small businesses where these resources are even more limited in supply. Hiring the wrong people is costly and can be seriously detrimental to the productivity – and even the future – of small and medium companies, particularly in the current economic climate.

ìSMEs need to think about working with organisations that can do the hard work for them but still offer solutions that suit the scale of their needs – broadening their recruitment reach while still allowing them to fill one-off or limited numbers of vacancies.î

Innovative – and cost effective – solutions are available through internet-based recruitment sites, which allow SMEs to take advantage of services that were previously the preserve of big businesses.

Jobsite.co.ukís online self-service offering enables SMEs to reach 40 per cent of the UK population through vacancy advertising and its CV database, potentially saving businesses between 49 per cent and 97 per cent of their recruitment costs – or between 154 million and 295 million a year.9 These services are paid for by credit card, enabling SMEs to fill small numbers of vacancies quickly without the need to commit to long-term contracts.

Recruiters looking to improve their interviewing can also brush up on their skills through interactive tools such as BeMyInterviewer.co.uk.

The UKís small businesses are incredibly important to the economy and employment. Official figures show that they account for almost 60 per cent of the UKís private sector employment – more than 13.5 million employees.10

Top tips for small business recruitment:

Interview better – Excellent interview technique is an invaluable skill for a recruiter. Knowing what to ask – and how – in order to get a feel for a candidate can save your company thousands in wasted interviews and recruitment fees. A good technique to grasp is competency-based interview techniques – finding out how candidates acted in a certain situation and why, to determine how they may act in a similar situation in future. Kirsty MacCulloch of GET demonstrates some excellent competency-based techniques on BeMyInterviewer.co.uk

Training – a key part of retaining your staff is training. It can make workers more motivated and more productive and by keeping your workers stimulated, you can ensure they donít get bored and start to look elsewhere

Building teams – by making employees feel like part of a team, you can make sure they feel safe and secure in their work reducing the risk of them looking for something new
Promote internally – before taking on someone new, take a look at the wealth of talent and ability currently sitting at your desks. Is there someone you can promote or can you create a role-share for two junior colleagues? Making the most of the people you currently have can help you and your staff to remain contented and keep motivated

Communication – by keeping regular communication with your staff members, hopefully youíll be able to ascertain when any of them are thinking of leaving and, more importantly, encourage them not to do so

Outsource – consider outsourcing your HR / recruitment function. This could save you valuable time and money and an HR professional will be able to assess your recruitment needs accurately and let you know whether you need to spend out on recruitment

Be flexible – try to fit around your employeesí needs where possible and within reason. By letting employees work slightly different hours or from home a few days a week, you could save your talent from leaving altogether
Broaden your reach – sometimes the most obvious places to advertise vacancies are not the most effective. Many potential employees might not be actively looking for a job or may live outside the immediate area, making classified ads less effective. Consider methods that will reach the broadest audience possible, such as an internet jobs board

1. SMEs make around 250,000 hires every year (Source: Federation of Small Businesses). According to the Jobsite White Paper (2006) each hire costs SMEs 1,264 and according to the CIPD report on Recruitment, Retention and Turnover 2008, 22 per cent of new starters leave the company within six months. Therefore: 22% of 250,000 = 55,000 employees in SMEs leave within six months. 1,264 x 55,000 = 69,520,000 spent on recruiting employees who leave within six months.

2. Chartered Institute of Personnel and Development (CIPD), Recruitment, Retention and Turnover 2008

3. CIPD

4. Jobsite Whitepaper, In Pursuit of Happiness, 2006

5. CIPD

6. Total Forum, September 2007

7. CIPD

8. The cost of job adverts on Jobsite.co.uk starts at 85 per ad and access to the CV database at 649, which represent seven per cent and 51 per cent of the average recruitment cost of 1,264 per hire, respectively. If SMEsí 250,000 hires a year were made using vacancy adverts, the total cost would be 21,250,000 – a saving of 294,750,000 on SMEsí total 316,000,000 spend. If SMEsí total hires were made via Jobsiteís CV database, the cost would be 162,250,000 a year, or a 153,750,000 saving.

9. Department for Business and Regulatory Reform