Finding qualified workers, particularly those with specialized technology, engineering or technical proficiencies, is increasingly difficult due to the intense rivalry to identify these skills from a diminishing pool of candidates. According to the Chartered Institute of Personnel and Development, the proportion of employers reporting a “war for talent” rose from 20 percent in 2009 to 62 percent in 2013. Six in 10 companies currently report difficulties filling key employment vacancies.
There is a significant price to pay. Without the requisite skills aligned with corporate strategy, an organization’s productivity declines, employee morale suffers and the profitable business growth stalls. According to the United States Department of Labor, the average cost of a bad hiring decision can equal 30 percent of the employee’s first-year income. Nearly 80 percent of worker turnover problems are linked to inferior hiring choices, and the longer that wrong employee stays on the job, the more it will cost to replace them.
Unfortunately, more than two-thirds of businesses are financially impaired by poor hiring decisions. When these mistakes are realized, the costs of replacing the substandard employee (excluding salary and benefits) are high: $7,000 to replace a salaried employee, $10,000 to replace a mid-level employee, and $40,000 to replace a senior executive.