Hiring: Is it Really Worth it Anymore?
Anyone who's ever tried to fill an open position within their business, even in times when there appears to be plenty of talent available, knows just how difficult and time-consuming the hiring process can be. And when that position is for a highly skilled individual within the construction, energy or petrochemical fields, finding the right person can be a nightmare.
As with any critical function of your business, there's cost and time involved, but do you know exactly how much it's costing to hire a single new staff member? Or even how long it really takes?
And when you see the answers, perhaps the most important question in all of this is actually: is hiring in-house staff really worth it any more?
Hiring Takes Time and Money
Using talent analytics to research onboarding data across a host of industries, Bersin by Deloitte has calculated how much it costs to bring new people into your business.
Bersin's study found that, on average, it costs US$4,000 to fill a single open position in the US. And that's not all - it also takes an average of 52 days to find and onboard just one new hire.
In the UK, Bersin found that the average cost of talent acquisition is £5,311 per hire. Markets with smaller talent pools that are sometimes reliant upon expatriate talent, like Singapore and Hong Kong, could spend even more.
Consider for a moment that these are averages, aggregated across a multitude of industries. Now think about how that average increases when applied to the construction, energy or petrochemical industries.
There are thousands of businesses operating every day in these industries where, for example, highly skilled claims professionals are needed to tackle a niche contractual issue. Or perhaps someone with particular experience of cost reduction methods is needed on a multi-billion dollar oil and gas project.
Those average costs very quickly seem conservative.
How to Work Out Your Cost Per Hire
So how do you work out your own average cost per hire?
To accurately determine how much it costs your company to find and onboard every new hire, you need to take the following factors into account:
External Recruiting Costs
Background checks, work eligibility (visas, etc.), and drug testing
Recruitment process outsourcing
Internal Recruiting Costs
In-house recruiting staff
Systems (e.g. applicant tracking systems)
Full-time internal recruiters
Since the COVID-19 pandemic, you should also account for increased safety and hygiene requirements within your internal recruiting costs - particularly if you plan to have in-person interviews.
The cost of additional cleaning measures within workplaces, social distancing requirements and sanitation facilities are affected by the number of people in your office and on your site. Post-hire, these costs will fall into your daily running/overhead costs.
Time frame to fill headcount
The above factors make up your cost per hire calculator to give an accurate cost per hire (or "CPH") for your business.
What Does it All Mean?
As a business operating in the construction, energy, or petrochemical industries, your projects likely need the expertise of highly skilled professionals every day. And these people not only need to be technically competent - you'll also want them to be productive while slotting seamlessly into your organisation without disrupting your existing team.
And which construction contractor or oil and gas operator doesn't want multi-skilled project staff? Quantity Surveyors who can also turn their hand to estimating and vice-versa and, at the same time, be experts in preparing and managing claims and negotiating accounts. Or Planners who can create credible programmes while being fantastic in client-facing roles, adept at writing excellent reports and skilled at quickly quantifying delay.
Hiring criteria in our industries can quickly become narrowed, leading to an increased CPH and - for that eventual new-hire - a feeling of overwhelm from day 1. All of which leads to high rates of absence, stress, unhappiness and eventually turnover.
And so the cycle starts again.
The Payback Period
The thing about hiring though, is that there is eventually a payback in productivity terms. It's just a matter of employers waiting it out - often for quite a while.
A newly-hired mid-level manager needs to have been working with your company for a period of six months before the CPH for that employee will have been worth it.
Research by Harvard Business School found that the average mid-level manager takes 6.2 months to hit their break-even point (or "BEP"). Which basically means that a newly-hired mid-level manager needs to have been working with your company for a period of six months before the CPH for that employee will have been worth it.
Is Hiring Really Worth It?
Hiring can no longer be looked upon as the only answer
Taking into account the cost of hiring new staff, the time it takes to find and onboard new employees, plus the slow return on that investment while working within the post-Covid world, it seems like hiring is actually more risky than it's worth.
But there's more to it than monetary concerns. For instance, if you're a relatively new company you may want to hire staff to buy-in to your vision and build a culture that transcends your products and services. Or perhaps you need to hire a member of staff for a specifically client-facing role.
Say, however, you're an established M&E contractor who needs someone to help with tender estimating and quantity take-offs. Given the costs and time required to find a person with the skill-set you're looking for, as well as the productivity pay-back period, maybe it could be worth looking elsewhere.
For instance, with an NDA in place and an introduction to the right professionals, could this job be outsourced to freelancers and consultants on a project-by-project basis? Is it possible that, by outsourcing 50-60% of the workload intended for this new hire, the rest could be completed by existing staff?
There has never been a more pressing need for businesses operating in the construction, energy or petrochemical industries to reconsider why they're looking to hire new staff. From there, careful calculation should take place to enable decision-makers to understand whether the business would be more productive and profitable by outsourcing to readily-available professionals, rather than going through the costly and time-sucking process of hiring.
The bottom line is that hiring can no longer be looked upon as the only answer - nor is it a simple black and white equation anymore.