We understand that everyone is hurting for candidates– the labor shortage is real, especially for those in the supply chain sector. Inflation continues to impact the sale of goods across the country, coupled with delays in shipping and delivery, all exacerbating the hiring struggles. And while the urgency to hire sufficient workers to keep up with these demands is valid, are hiring decisions being made too fast?
With a current turnover rate of 150%, the present condition would suggest as much.
Now there’s tension on both sides: if you take too long, you miss out on good candidates. If you go too fast, you create more problems and accrue additional costs. We are not dismissing the first concern but want to zero in on the latter. What is the cost of bad hires and how do you guard against rushed decisions?
The Cost – Why It’s Important to Get Hires Right from the Start
Have you ever mapped out the full cost of hiring mistakes? First, there’s the direct cost – the monetary expense that naturally comes to mind. The U.S. Department of Labor estimates a bad hire costs approximately 30% of an employee’s annual salary, which is no small chunk of change, especially with rising inflation. And when turnover is a continual occurrence, the losses translate into a heavy hit to your company’s gross margin.
But then there’s the time cost. Have you planned our your hiring process? Creating a well-planned out interview process ensures you are prepared before you even begin. Clearly understanding the make-or-break qualities for potential candidates is essential. However, not everyone invests in these crucial steps beforehand. And when organization is neglected, hiring teams end up recreating the wheel, so to speak, racking up time for every open position.
And third, there’s the opportunity cost. The more your company is focused on hiring and training (and rehiring and retraining), the more progress you lose in addressing the shortage of truck drivers, the lack of warehouse space, or a solution to better meet consumer demands. All this pressure adds up for current employees because – whether they are helping with the hiring process or picking up the slack from being short-staffed – the stress leads to reduced production and the inevitable burnout of your people.
3 Steps that Keep the Right Employees in Your Company
While processes and structure are needed for a successful business, especially in the high demand of the supply chain world, investing in your people must come to the front of the line if you are to build a lasting workforce. What environment are you inviting people into?When you create an attractive place to work, you plug in the right employees from day one.
- Invest in your people – What are you tangibly doing right now that supports your team? The answers to this question are endless. You could be implementing up-to-date operating equipment, providing quality organization (like HR software), improving team dynamics, creating a supportive culture and pathways from assemblers to managers, and… you get the picture. And each item on that list could have its own article because the way to improve team dynamics or create healthy cultures will look different from company to company.The key is this: always be striving to create a place people want to work. That doesn’t mean you can alleviate all problems, but you can foster an environment where people feel a sense of community and support. When your team is on the same page, you can effectively address the challenges of the industry.
- Hear their concerns and follow up – What are employees’ current wins? Their current challenges? Who checks in on a regular basis with your employees? A crucial ingredient in answering these questions is consistency. The more these topics are addressed, the more employees will share those positive moments and struggles precisely because it’s not an occasional meeting but a regular And when employers take action on concerns and goals, employees know they have a valued place in the company.
- Enlist support for hiring decisions – Enlisting the help of a recruiting or search firm can be invaluably beneficial because they are experts in the realm of hiring. They live and breathe the current state of the job market, allowing them to give real-time advice, not just for bringing people aboard but for letting employees go too.When you hire new employees, you want to give them time to adjust. Depending on their experience and background, the innerworkings of your distribution center may provide some learning curves. Letting an underperformer go after one month may be a tad preemptive if they aren’t hitting essential benchmarks. However, keeping an underproducing employee for six plus months could be overkill.If you are struggling to determine the balance, talking to a search firm can offer perspectives to assess if your requirements and expectations match candidates in the current market. So, whether you are wrestling with the idea of letting an employee go or trying to pinpoint the next great addition, outside support can make all the difference.
Three simple, although not always easy, steps to build your workforce. As you count the cost of hiring and actively invest in your people, you will build an inviting environment, increasing your company’s ability to attract and retain the right workers, both today and for years to come.
Looking for more input in your hiring process? Take a look at our services and learn how we can help you make the right hires the first time around.