How Can Inefficiency in Hiring Affect Your Business? | ON DEMAND BOOKKEEPING
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How Can Inefficiency in Hiring Affect Your Business?

How Can Inefficiency in Hiring Affect Your Business?

Staffing or hiring is the process of supplying the business with the appropriate people to fulfill its goals and objectives. Like any management function, it can be divided into stages:


Forecasting hiring needs and recruitment targets, analyzing job requirements, creating human resources policies and programs, and formulating job descriptions


These include posting job openings, recruiting, screening, interviewing, selecting, hiring/signing, deploying, onboarding, training, and development


These include performance appraisal, program evaluation, and management information

All of above activities require time and resources from HR, recruitment agencies, and management. Typically, companies spend about 8-12% of a candidate’s salary in recruiting costs alone. Thus, an inefficient hiring process can adversely impact productivity and cost money. Here are some areas worth looking into:

Unclear recruitment objectives

If there are no clear recruitment targets and objectives (e.g., increase awareness and applications by increasing traffic to career site by x%), it would be difficult to determine if your recruitment efforts have been a success, or if you are spending too many resources but not yielding expected results.

Internal versus external sourcing

Narrowing the pool to existing employees may appease the desires of current employees for internal promotions, but may also cause the company to miss out on fresh talent from external candidates. On the other hand, extending the search to external hires takes more time and expenses to complete, but may result in better-qualified candidates. Proper forecasting and performance appraisal processes for existing employees would help in making a cost-effective strategy for sourcing.

Poorly defined job requirements and target audience

Having poorly worded job titles or outdated job descriptions make the job posting seem less attractive to the ideal candidates, thus reducing the probability of engaging and motivating top talent to apply and increasing the time spent for talent acquisition. Benchmarking with competitors to see if their postings are getting more reach would help in coming up with stronger job offerings that would generate more interest.

Lengthy screening and selection process

Although it gives companies more time to vet potential employees, a longer hiring process can also lead to the loss of top candidates who may have a lot of other faster moving job offers to choose from. Losing quality candidates leads to a reduced pool of candidates, which might include sub-par individuals who might eventually turn out to be bad hires. A slow and inefficient hiring process also means more time for a position to remain unfilled and thus, rendering it unproductive, or necessitating the hiring of a temporary employee, which leads to more costs.

Dealing with bad hires

Having to replace bad hires means performing the entire recruitment, hiring and training process and incurring the same costs all over again.

Training new hires means investing time, expenses, and effort. The onboarding period requires some degree of hand-holding from the training manager or team, thereby sacrificing their productivity as well.

Hiring people with mismatched skillsets could lead to high time to productivity, or the length of time needed for the new employee to be 100% productive in the position. It is estimated that it takes five months for an employee to reach full productivity. A longer timeframe would mean higher amounts of pay are wasted on lost productivity.

Poor employee performance can lead to increased mistakes, reduced sales, and diminished brand power due to bad customer service. The cost of hiring an underperformer can be computed by using the average revenue per employee. For example, if bottom-performing hires produce 10% below average, then multiplying that percentage with the average revenue generated per employee would give an idea of the potential lost sales.

Issues with culture fit might lead to lower morale for the existing employees, leading to damaged productivity, absenteeism, and higher employee turnover.

Hiring the appropriate people greatly impacts business productivity and profitability. If you want your business to grow, then you need to reevaluate your hiring process and make sure that it remains competitive.

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