Recruitment is an expensive business and there are various metrics and calculations that are used to try and work out cost per hire. According to Glassdoor, the average employer spends approximately £3,000 on hiring a new member of staff. The website Test Candidates though, thinks that figure is significantly higher with an estimated overall cost per hire of £7,275-£22,515 depending on the seniority of the position you are recruiting to.
The need to recruit a new employee happens for a whole host of reasons. Your business might be growing and your team needs to expand to support that growth. You might be making a like for like replacement for a leaver, or you may have found that you don’t have the skills in your current team that your business needs to be successful. If the latter applies, then have you ever thought about investing in growing your own talent rather than hiring candidates who appear to be off the shelf ready?
Upskilling your existing staff has a number of benefits and nurturing your own existing talent pool can be fantastic for an employer and their employees alike. By upskilling existing staff and developing talent within your business, you are demonstrating to your team that you value them, you’re invested in their future growth and success and that you want them to play a key role in the success of the company. This is a powerful message to give to your team and it should result in high levels of staff engagement and morale, as well as strong productivity and low staff turnover.
Growing your own talent is also important and beneficial to your business in relation to succession planning. Your business can lose a lot of skills and knowledge when someone leaves and is vital that through effective succession planning you identify employees who can be coached and mentored so that they are primed and ready to step up when the time is right, and so that your business doesn’t suffer.
Developing your own staff though can have some downsides. Selecting which staff to develop can cause friction and even lead to grievances if people feel that they have been overlooked. To prevent that, it’s advisable to either have clear selection criteria, based around objectives measures such as appraisal and performance outcomes, or have an open door policy whereby anyone and everyone can attend development training.
Upskilling employees can also be expensive, even if training is delivered in-house as there will be a time cost to the business if nothing else. And if you have a large number of staff off the job and attending training, those costs quickly stack up. If you are developing staff via external courses and qualifications, again that can be costly unless you are able to access funding. That’s not to say that it isn’t worth doing, but it may be cheaper to hire a ready made candidate rather than train someone which will take time and have a cost. If your business decides to upskill and put staff through qualifications, then it is wise to use training costs agreements in order to protect your investment.
Hiring staff is often regarded by employers as a quick, simple and effective method of filling a skills gaps, whether that’s to replace a leaver or to step into a newly created role. The first questions employers should ask themselves though is, “do I need someone with experience immediately, or could I work with a local college, or training provider to identify a suitable apprenticeship or T Level pathway to bring someone in at the start of their career and nurture their talent?”. The latter is more of a long term project but is cheaper.
If you decide to hire someone experienced then that can be good for your business. Bringing in someone new will add fresh imagination and ideas on how things are currently done and how they can be improved. A new starter will also bring with them other skills, knowledge and experience that they have gathered throughout their career, and they can share this with colleagues which will then help others to develop as well.
When you hire someone who already has the skills that your business needs then that can be beneficial in terms of time and cost, as they won’t need developing in the same way as someone with a lower skill level.
Hiring a candidate with the requisite skills though isn’t a panacea for all your people needs. Whilst it can be useful, hiring someone new can be problematic. First of all, finding candidates isn’t always that simple. According to figures from the British Chambers of Commerce, 78% of firms who were recruiting in 2022 reported that they faced difficulties in finding staff. If you do find the right person, then you might still face competition as the CIPD recently reported that around 40% of employers have made counteroffers to keep hold of staff and stop their talent draining away in the last 12 months.
Bringing in new staff can also negatively impact on existing employees. Some of your current team may feel that they should have been developed instead of bringing in a new hire. They may have even been interviewed for the job but were unsuccessful. In those cases it’s wise to keep an eye on relationship dynamics so that issues don’t get out of hand.
Whether you upskill or hire, HRX can help
Overall the decision on whether to upskill or hire can be tricky and businesses may do both at different points in time and for different roles as they see fit. What is important is to be open minded, to make a decision that is right for the business as a whole and where possible to have clear rationale for the decision rather than just doing something because it has always been done that way.
Whatever you choose to do, HRX can help. Our HR software can help with your recruitment process by helping you find the talent you’re looking for and enhancing your candidates experience, amongst other things. Similarly, if you decide to upskill your staff, our software can store all important documentation relating to your staffs upskilling journey in your employees individual record. And your employees can upload certificates or course documentation themselves thanks to it’s handy self-service feature.