UK SMEs wasting an average of £125,347 a year on failed recruitment

Survey finds that 94% report a problem with candidates pulling out after accepting an offer.

Businesses employing up to 250 people are losing 14% of their staff each year, only to see 39% of their new employees leave within six months.

This leads to small to medium enterprises (SMEs) wasting an average of £125,347 a year on failed recruitment. 

That's according to new research by Oleeo, a provider of talent acquisition technology, which has produced a ‘See the Unseen’ research report examining the challenges companies face in a bid to find the right talent. 

"People often think of recruitment as a cost centre," said Charles Hipps, CEO and founder at Oleeo. "They typically focus on the things they can see, such as agency charges or the cost of running the internal team. 

"Far less attention is paid to hidden factors, such as staff churn, time taken for new recruits to start performing or an organisation’s effectiveness at attracting talent that both stays and performs.  

"Yet these unseen costs have a fundamental impact on a business’ bottom line, its performance and the workload facing its HR team."

According to Oleeo’s research, finding the right talent is a major concern for UK businesses, with two-fifths in a constant battle with people leaving. Almost half (47%) of those questioned expect to lose over a tenth of their workforce in any given year. 

When this is combined with 14% of HR heads expecting new hires to leave within just 30 days, and 39% estimating it will be within the first six months, the scale of the problem is clear to see. 

On top of this, 72% feel that competition for top talent is greater, or at least the same, as it was three years ago, while 94% have a problem with reneging – where people pull out of the process after accepting an offer. 

Adding another layer of complexity to the situation is the diversity conundrum, which is still an issue for one in five, with 48% actively looking to improve the ethnic diversity of their employees. 

More than a third are striving to increase gender diversity, with 33% wanting a more diverse workforce in terms of their employees’ education and background.

All these factors put a significant, often hidden, cost burden on organisations. The data shows that the average cost per hire, based on a £25,000 per annum role, considering all of the associated costs - HR team’s time, recruitment costs, training and onboarding costs, and loss of productivity - is £9,183. 

"As a practical example, let’s take an SME that employs 250 people," said Hipps. "It is losing 14% of its staff each year, plus 39% of its new employees leave within six months. When you combine these figures with the £9,183 cost, we can assume that it is wasting £125,347 on failed recruitment each year.

"According to our research, 54% of senior decision makers spend 5% or more of their turnover on recruitment. This can either be viewed as substantial backing from UK businesses keen to find new ways of attracting top talent, or as precious revenue being needlessly spent."

 

For more features and breaking news, sign up to C&IT Magazine's daily Newstracker

Have you registered with us yet?

Register now to enjoy more articles
and free email bulletins.

Register now
Already registered?
Sign in
Top Banana hires non-executive director

Top Banana hires non-executive director

New addition brings more than 30 years experience to the agency and will mentor and advise the leadership team.

Why there's been a surge of new hotels in Perth

Why there's been a surge of new hotels in Perth

Its pristine beachfront rivals California, with massive investment in tourism creating new hotels and jobs.

Case study: Hamburg hosts two global conferences in one week

Case study: Hamburg hosts two global conferences in one week

Global Investigative Journalism Conference and INMA Media Innovation Week took place in September.

Introducing the C&IT Awards Americas

Introducing the C&IT Awards Americas

As C&IT expands its reach globally, we're launching the C&IT Awards Americas to recognise the best in US events.

12 brand new US hotels opening in 2020

12 brand new US hotels opening in 2020

From festival-chic Coachella to foodie-heaven Chicago, Visit The USA picked out the 12 most exciting places to stay next year.

The simple secret behind creating 'magical' events

The simple secret behind creating 'magical' events

APAC industry leaders share some of the best and most memorable moments they have created at events.

In pictures: C&IT Incentives Retreat 2019

In pictures: C&IT Incentives Retreat 2019

Event planners, venues and destinations joined C&IT for two-days of activities, sessions and meetings at Chewton Glen Hotel & Spa.

Top 3 reasons corporates work with agencies

Top 3 reasons corporates work with agencies

From finding specialist skills to gaining new perspectives, corporate event planners share the top reasons they work with agencies.

Dear C&IT: 'We all need to cut down on food waste'

Dear C&IT: 'We all need to cut down on food waste'

Julia Charles Event Management managing director says planners need to do more to fight food waste at events.

Case study: DHL's employee of the year event in San Francisco

Case study: DHL's employee of the year event in San Francisco

Part five of our State of the Industry: Corporate Report is an in-depth look at DHL's big three-day event for its staff.

LATEST JOBS