In Singapore, as in many other markets at present, there is a buyers’ market for talent. In other words, supply somewhat exceeds demand.
There is a widely held attitude that says that in such a market, employers have their choice of the supply, so recruitment gets easier. If recruitment is easier, then there is no reason to invest much in their selection process. It is only in a sellers market, i.e. when demand exceeds supply, that the conditions of McKinsey’s “war for talent” apply. Or at least, so the conventional wisdom goes.
Let me give you the alternative view. Call it contrarian if you like, but it is actually just common sense.
- An oversupply of talent means that people are more desperate and therefore more likely to apply for jobs they are entirely unsuited for;
- Oversupply tends to be sectoral, not general (ask any F&B or hospitality operator in Singapore if they are finding it easier to acquire the people they need);
- The cost of a wrong hire is just as great in a buyers market as it is in a sellers market.
On that last point, if you think otherwise (say, on the grounds that you can hire at slightly lower salary or wages) you probably haven’t fully understood what a bad hire actually costs you.
My own list would include:
- lost revenue,
- lost repeat business,
- lost reputation and (very quickly)
- lost market share.
The US Dept of Labor estimates direct costs of a bad hire as 30% of their annual salary; to me that seems low.
A recent article suggests you need to consider the cost of onboarding them as well. Another suggests that the warm-body fallacy - i.e. that someone with a pulse is better than nobody at all - is extremely dangerous, because it ignores the brand destroying damage a wrong hire can achieve. And Zappos CEO Tony Hsieh estimates that bad hires have cost Zappos over $100m - even though Zappos hires slow and fires fast.
Of course for the rest of us, it typically takes 4 to 6 months to let even an overtly bad hire go, which means there is a significant opportunity cost (you can’t hire the right person until you get rid of the wrong person).
Lastly, and given that your customers are likely to be more conservative with their money in a buyers market for talent (because economic conditions tend to be muted or uncertain at best), any advantage you thought you had gained through paying lower salaries is probably worse than illusory. Those cheap, wrong hires are driving scarce customers away.
So what would you pay to increase the likelihood of hiring great employees instead of underperforming ones? The reality I encounter all the time is that a CEO will tell me how they do their recruitment, insist that it is working fine for them - and then proceed to tell me all the people problems they are wrestling with. If that recruitment process is really working for you as well as you say it is - well, why so much trouble?
The truth is, most people’s answer to that question, “what would you pay to increase the likelihood of hiring great employees…” is “as close to zero as possible.” And all that goes to demonstrate is that when it comes to recruitment, most of us are stuck a long time ago in a faraway galaxy, many light years away from logical, rational and pragmatic.