The Real Cost of Slow Hiring Decisions in a Project Environment

Posted by Trent Clulow on 23 November 2017 Comments

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Nobody likes making mistakes when it comes to the hiring process, but every once in a while, and often without their knowledge, someone is going to make a bad decision. Whether it be timing or the quality of the hire, in construction it can derail the progress of a project resulting in the need for damage control from project start-up. The overriding feeling is “it happens, let’s move on.” However, while on the surface the cost of a few weeks might seem minimal, the real cost of untimely hiring is vast, particularly when a central judgement of a project’s success is based on budget and of course, schedule. It must be said, hiring someone quickly, without thorough onboarding processes, who doesn’t have the technical and cultural attributes you need isn’t the solution.

Poor hiring is not something that happens in a vacuum; there are consequences and costs that go far beyond the salary you have to pay them. A survey undertaken by The Australian found that a bad hire could cost a business as much as two and a half times the employee's salary. From a hiring timeframe perspective though, after conversations with many Project Directors, Project Managers, and Construction Managers, it became clear that there needs to be a mindset shift in the way the hiring process is viewed, as the costs are extensive, and not just to the bottom line. Here’s how.

External Costs

Getting people up to speed takes a significant amount of time and resources. This is amplified when there’s a hole in the organisational chart that remains for longer than expected. Delays are an obvious result when it comes to delivering the specific work required, but an underestimated outcome is your other staff making up for that lack of output, decentralising their responsibility and either increasing workload, or forcing two functions to be undercooked. Over time you will see a significant impact on the productivity and performance of the project. This domino effect ends in delays, company culture implications, client dissatisfaction and potential compromises to quality, and importantly, safety.

Indirectly, if word of under-delivery spreads, it can leak into the wider marketplace, tarnishing your organisation’s brand perception. A project delay is one thing, but actively endangering market perception and relationships is another. These have a huge impact on future talent attraction and set you up for some very difficult conversations with clients to attempt to iron out problems and clear your organisation’s name.

Internal Costs

In a project driven environment, every day counts. It’s often stated that an extra two weeks of not hiring someone can cost up to $50,000, a significant amount. While these costs can be recouped by a candidate who performs at the expected level, it becomes more complicated as the compounded tasks fall on the new staff from day one, to pick up the slack.   Then as this cascades into multiple position delays in a major project environment, the true project impacts start to become clear. Procurement is affected, sub-contractor engagement is compromised, workload expectations skyrocket and decision-making is often handed to personnel who shouldn’t have those responsibilities. Some managers mentioned that as little as three to four key professionals hired slower than the project anticipates can result in schedule repercussions that run into the millions of dollars. 

One of the biggest effects poor and slow hiring processes can have is a negative impact on the culture of the project and company. If there’s ongoing disturbances to the core functions of someone’s role, this can disrupt a collaborative environment, often without even being aware it’s happening. The simple fact is that high performance breeds high performance. Upsetting the equation with unclear responsibility can cause you to lose your best people as job satisfaction dissolves, and standards drop below the expectations of your top performers.

How Can You Decrease The Risk?

As you can see, it’s difficult to stamp an exact price tag on slow hiring processes, but once you really break it down, the actual cost to your business in terms of lost time and wasted potential is enormous. There are certain measures you can take, however, to reduce your risk of this.

Mindset shift – talent investment and risk education

There’s a clear perception that knowledge of the consequences of a poor hiring system is not recognised business-wide. The guys on the ground experience it first-hand, however this may not be understood by senior management, the commercial team or HR. This can happen as the people running the projects are often hired behind the 8-ball. To limit this, there has to be a holistic business view on the importance of the hiring process – almost a shared value proposition etched in the minds of all involved. The mindset shift comes in the form of lessons learnt and story-telling. A collaborative, shared vision is powerful.  A shift toward a hiring investment mindset – wearing initial costs for hiring for the betterment of the whole project – much like that of your gun pre-contracts team. This may also highlight a lack of understanding in hiring for project cycles, with professionals in construction expressing a clear theme that construction personnel should be present throughout the study and design phases of projects, something many businesses overlook.

Closer relationships with your recruitment partner

There’s so much to gain out of your recruitment partner if you value them and leverage the knowledge they possess. In a projects environment, good recruiters leverage the benefit of having a market helicopter view – they understand what projects are coming to an end, what projects are having cultural issues, what businesses/projects are kicking goals and why, key industry influencers, the list goes on. But do your research to ensure you’re aligned to a partner that is best suited to you, after all, they’ll be promoting your brand to the market. Investigate their job advertisements, the content they promote, their business history, and speak to your industry peers to get a feel for their reputation in the industry.

From here, by engaging them early on in the process, with the knowledge and market access they possess, you maximise your potential to make a great hire, to clearly defined criteria and timeframes.

Final Thoughts

Financial loss is only the tip of the iceberg when calculating the repercussions of slow hiring. When all is said and done, the mounted cost of morale, decreased productivity, project delivery, and even your reputation, can take a huge toll. To combat this, invest the time in consulting the whole business in the importance of your hiring process, and apply recruitment strategies that will attract only the best candidates who will fit into the role and your company culture, in the timeframes that drive project success for the long haul. To save you the headache in the long run, it’s worth the investment earlier on.

To hear of some case studies of our involvement in projects, call us today. We’ve got a track record in finding talent in a timely manner, and offering value beyond what is perceived in your typical recruitment partner.

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