This article is inspired by a fantastic article written by Dr. John Sullivan. My version covers some different territory.
Employers often talk about the cost of bad hires. But we don’t talk about the cost of missed hires — the great employees we fail to recruit/hire. In a talent shortage market, that cost is likely much higher than the cost of bad hires. In fact, Facebook recently learned this at a staggering cost, when two employees they had interviewed and subsequently rejected turned around and founded WhatsApp. Facebook purchased the startup within five years for $19 billion. Both “rejects” are now Facebook employees, one immediately added to their Board of Directors. This is a striking example, because Facebook is well-known and the dollar figures are high, but similar scenarios happen every day. Consider the following reasons for missed hires, along with their solutions. The great candidates who don’t apply. Perhaps they are passive candidates who never saw your job posting, since they aren’t actively looking. Or diversity candidates you failed to target. Possibly they saw your posting, looked you up on Glassdoor.com and decided to take a pass. Or most commonly, they went to your website and were unimpressed by a lackluster (or altogether missing) careers section. The really scary thing about these candidates is, you will never know about them. They are the ones that got away without your knowledge. And they might never again be willing to consider you as an employer. Solutions: Diversify your recruiting. Complement job postings with active sourcing. Ramp up your commitment to being an employer of choice. And increase your employer branding, especially online. The great candidates who apply and ultimately decline your offer. Maybe your compensation hasn’t kept up with the changing employment market. Perhaps they had a negative “candidate experience.” Or maybe you (or one of your hiring managers) simply failed to sell the opportunity. Solutions: Conduct job analyses and compensation benchmarking on a regular basis. Take a close look at your EVP — employer value propositions. And make sure that everyone who comes in contact with candidates understands the importance of “wowing” them. The great candidates who apply, but who you don’t hire. Again, remember that we are specifically talking about great candidates here, so this is a serious problem. It can be the result of invalid hiring criteria. (Recent studies have cast doubts on the following criteria, for example: college GPAs, industry experience and “job hopper” backgrounds.) Another common factor is hiring managers with inappropriate prejudices (overt or undisclosed), often illegal as well as counterproductive. One last common scenario is improper use of pre-hire assessments—using the results to bump a candidate, for example, rather than to guide probing interview questions. Solutions: Review and question your hiring criteria. Train everyone involved in the hiring process and make sure your hiring managers are conducting compliant, effective interviews. If you use pre-hire assessments, make sure they are validated and that hiring managers are properly utilizing the results. For key roles in particular, don’t let a single hiring manager reject a candidate. As the economy improves, baby boomers retire, and the skills shortage widens, you simply can’t afford to let great candidates slip by. We’re all aware of the cost of bad hires and turnover … but for many employers, the cost of missed hires may put both to shame.