Real financial losses, project delays, a drop in efficiency and low morale – these are only some of the consequences companies have to face after a failed recruitment. What support can employers count on from a recruitment agency? How do you set the rules right?
When outsourcing recruitment, an organization decides to use a professional service performed by specialized consultants, which saves time and guarantees faster and better results. However, it may also happen, that for whatever reason, the newly recruited employee or the employer are not happy with the outcome.
How much does losing an employee cost?
The moment we part ways with an employee is when each HR manager has to crunch some disheartening numbers of lost costs. How much will the organization lose? We paid X to the recruitment agency, implementation costs Y, and each day with an unfilled vacancy generates losses of Z. The notice period as well as the time necessary to recruit a new person – 20 days being the best-case scenario – all adds up to a lot of manhours.
And finance is just one part of the equation. There are losses that cannot be easily quantified: lower morale in the team, strained company image, deteriorating turnover statistics attracting a lot of unwanted attention from the HQ. Each company has its own figures, but on average the failed recruitment of a specialist with a gross salary of PLN 5,000 who leaves before the end of the three-month trial period is at least PLN 40,000. Naturally, it’s better to prevent this from happening in the first place, but we can’t foresee everything.
The candidate is gone – what now?
Whether it is the employer bidding farewell to the new hire or the employee leaving the employer, it is the company that bears the brunt of the failed recruitment cost. In both cases, the employer has the right to receive a guarantee service from the recruitment agency they used, but its scope depends on the contract. The guarantee compensates for the failure in various forms. The recruitment agency could be obliged to carry out the recruitment again within the same fee payment. Another solution is presenting the employer with a set number of candidates fitting the profile, in which case the guarantee is fulfilled whether the client hires a candidate or not.
Other options include: money return, fee being settled as part of another recruitment or a discount for a subsequent recruitment. A guarantee is available for a time period specified in the agreement. For the SSC/BPO industry, it is usually between one and 12 months depending on the position and other negotiated conditions. Payment is a very important aspect, because in many cases the client is not eligible to receive a guarantee service if the payment is not made in time.
New recruitment or maybe a recommendation?
The form of guarantee that is beneficial for the company depends on the circumstances. If we need an employee urgently, we will opt for a new recruitment process. In this case, usually the best candidates from the previous recruitment are again taken into account. If that fails, we start the process again. In some cases, the guarantee only encompasses recommendations of candidates meeting the profile and skills criteria.
Sometimes, the job offer is pulled, either because it is filled internally, there is a successful recommendation from another source, or the position itself is redesigned. If that happens and there is no actual guarantee service required, it can still be provided in the form of another, similarly defined recruitment process. It has to be discussed with the agency. Refunds are rare, mostly because such agreements are more restrictive for the client and for the agency.
Another candidate, money back or a stack of CVs – whatever form of compensation we have for the service, we should first understand what the reasons for the failed recruitment were. Only a thorough analysis can allow a recruiter to provide a high-quality service and the company itself can learn a lot in the process. Antal’s observations show that feedback about the onboarding process, the selection itself or the combination of soft and hard competencies required for the position are readily available. Quite frequently, the recruiter also receives feedback from the selected candidate.
Such a multi-layered view of the situation can greatly improve every aspect of the recruitment and onboarding process. The purpose of the post factum work is to prevent failed recruitment in the future and limit unwanted employee turnover. Both sides analyzing the case together can identify the weakest points in the process. It is a consultant’s job to actively participate in the analysis to increase hiring efficiency for each client. I know from experience that a guarantee service done right is often the beginning of a good cooperation based on trust, because every organization and every person learns best from their mistakes.
Account Executive Europe
If you want to learn more about how to avoid failed recruitment costs, we recommend reading 4 Methods to Determine Recruitment ROI.