Although hiring and retaining excellent employees is crucial for any company, it’s particularly important for SMEs. This isn’t just because smaller staffs mean each employee is more integral to the success of the company, it’s also because SMEs can’t afford the significant costs associated with hiring the wrong people.
There are many strategies and tools SMEs can use to drastically improve their hiring processes, from pre-employment assessments that can predict how well candidates will perform in their roles to virtual interviews to onboarding procedures that will rapidly integrate new hires with their teams. The long-term effects of more rigorous and streamlined hiring practices are substantial: higher morale, lower employee turnover, and, ultimately, increased productivity.
Reducing the immense costs of a bad hire
When companies consider the risk of a bad hire, they have to account for much more than opportunity cost and inconvenience. There’s a wide range of direct and indirect costs the companies incur when they make the wrong hiring decisions: employee remuneration; the time and resources invested in finding and reviewing prospective employees; onboarding and training costs (as well as other administrative costs); and the loss of productivity.
The costs associated with hiring mistakes are especially harmful for SMEs because they have limited budgets and each new employee has an outsize role in day-to-day operations (in comparison with larger companies).
Turnover can also have a corrosive effect on employee morale, which can in turn lead to even more departures. This creates a culture in which collaboration suffers because fewer employees are forging long-term relationships with their colleagues – a reminder that the long-term consequences of bad hires go well beyond the immediate direct and indirect costs.
It’s time for SMEs to revamp their hiring processes
According to Deloitte, SMEs consider hiring one of their top challenges. A recent LinkedIn survey mirrored this finding – 84 per cent of SMEs say they “struggle to find enough people to interview and hire,” while 73 per cent say competition with better-known companies prevents them from securing talent.
It’s clear that SMEs need better methods for finding, assessing, and hiring employees. The good news is that these methods are becoming more powerful and accessible. For example, pre-employment assessments measure traits that have repeatedly proven to be highly predictive of professional success, such as general cognitive ability (GCA), emotional intelligence, and conscientiousness. And these assessments don’t just help SMEs develop an evidence-based approach to hiring – they also mitigate the cognitive biases that often creep into hiring decisions and lead to discrimination.
Implementing a holistic hiring strategy
While assessments and other digital hiring solutions are essential for SMEs that want to hire employees in the most consistent and data-driven way possible, this doesn’t mean other hiring methods are irrelevant. Companies need to provide prospective employees with a compelling job description; use all the methods of sourcing candidates at their disposal (including referrals, social media, and job boards); and conduct structured interviews. This minimises the bias of the interviewer and ensures that every candidate gets a fair shot. Before SMEs even get to the interviewing stage, skills tests and psychometric assessments can narrow the range of potential candidates to the ones that most closely align with the company’s preferences – a reminder that new hiring methods can work in tandem with old ones.
Considering the challenges that SMEs face in the post-COVID world – from a much larger pool of candidates to an ever-more dynamic and competitive global economy – it’s clear that they need to explore the full range of hiring solutions available to them.
Cherie Curtis, President, Criteria