‘You’re hired!’… but at what price for the business?
29 October 2014
I think it’s generally accepted now that we’re edging our way out of the recession… And, as seems to be the case when economic conditions improve, many organisations follow the habitual pattern of recruiting like mad at the first signs of recovery. But businesses can start managing their workforces in a more flexible and intelligent way and by using big data insights such as predictive analytics to understand their future recruitment needs and how to maximise performance amongst their existing staff.
In our latest report ‘A new vision for growth’ we found that the revenue UK organisations are generating from each full time employee has dropped by nearly a quarter over the last three years. Our data shows that UK organisations are now recruiting more external people (12.8% rate of recruitment compared to 10.9% in 2011) but this is at a faster rate than revenue is growing, meaning a knock-on impact on productivity. In fact, revenue per full time employee has dropped back to levels last seen in 2008.
The problem is that too many organisations are simply following the pack and recruiting because everyone else is, rather than because they need to. We don’t all have the time to put our recruits through the robust process that Sir Alan Sugar might use to hire his next Apprentice. But smart organisations will take a more strategic approach to their recruitment and using tools and information to understand where they have skills shortages and but also how they can do more with the same resources.
We found in our survey that a failure to recruit more strategically is costing organisations thousands of pounds worth of lost profit. The data reveals that the difference between efficient recruiting, matching people carefully to their roles, training them more quickly and having a more productive can be as much as £34,000 marginal profit per employee in the banking sector and up to £67,000 per employee in the utilities sector.
And getting it right strategically can have a knock on effect on the productivity and performance of your employees. Smarter workforce management also translates to higher job acceptance rates, lower absence rates, more money invested in training, lower resignation rates and people staying longer at the company.
So it makes sense to me that organisations should be thinking far more carefully about where their people will come from, what they’ll do and how they’ll contribute to performance.