Paul Farrer at July 2013 Directors Event
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Paul Farrer has spent the last 20 years helping build the Aspire Global Network (established originally as Phee Farrer Jones in 1992) with six specialist recruitment brands. He has recruited hundreds of recruiters over these years and shares some of the mistakes he has made; what they've cost the business and the lessons learned.
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Paul Farrer at July 2013 Directors Event
- 1. // More Together Recruitment Mistakes hundred I’ve made a few
- 3. Why people leave Aspire? 10% fail probation 34% other rec co 10% own biz 30% out of rec 10% relocate 6% other 70% of those who joined other recruiters – were on performance objectives. 40% joined competitive companies 100% of new employers didn’t request a reference 7 were recruitment mistakes
- 4. The real cost of recruitment mistakes – cost per desk • Annual NFI/NDR/GP per employee = opportunity cost of a desk • Divide by 52 for opportunity cost per week • Multiply by number of weeks desk is vacant = base cost • Add recruitment costs = any R2R fee, add costs + management time • Add induction costs = management time • Add weeks taken to bill • Add annual NFI/NDR/GP per employee less billings • = Real Cost
- 5. Aspire cost of recruitment mistakes – cost per desk • Annual NFI/NDR/GP per employee = £102,786 • Divide by 52 for opportunity cost per week = £1977/wk • Average Number of weeks desk is vacant = 5 x 1977 = £9885 • Add recruitment costs = possible R2R fee + management time • Add induction costs = management time • Add weeks taken to bill = 10 x 1977 = £19,770 • Add annual NFI/NDR per employee (£102,786) less billings (av £95,692 1st 12 months) = £7093 • Real Cost per hire = £36,748 • Of which 7 replacements were recruitment mistakes = 7 x £36,748 = £257,236
- 6. Aspire cost of mistakes – FEE EARNING DESK • Annual NFI/NDR/GP per employee = £132,933 • Divide by 52 for opportunity cost per week = £2556/wk • Average Number of weeks desk is vacant = 5 x 2556 = £12,780 • Add recruitment costs = possible R2R fee + management time • Add induction costs = management time • Add weeks taken to bill = 10 x 2556 = £25,560 • Add annual NFI/NDR per employee (£132,933) less billings (av £95,692 1st 12 months) = £37,241 • Real Cost per hire = £75,581 • Of which 7 replacements were recruitment mistakes = 7 x £75,581 = £529,067
- 7. Mistakes we have made…….. ….. more than once!
- 8. What we have tried • RCQ – psychometrics • Role plays • Presentations • Competency based interviews • Values based interviews • Team drinks • Reference Checking • Linkedin Profile v CV • HR Director does ALL 1st interviews
- 9. And finally
Editor's Notes
- Objective is to:Share some of our mistakesDemonstrate why people leave and the cost of recruitment mistakes is to the business todayWhat we have tried in our recruitment processes, what works and what didn’t
- The call went like this “is that Paul Farrer?” Yes“I am John Doe from XYZ Executive Search and I understand that JP may have worked for your company a few months ago. Sadly his Greek grandfather has died and he is in Greece for 3 weeks as a result. He has been with us for 3 months and we have had some concerns particularly now we are speaking to some of his clients. Can you tell me a bit about him?”“Yes I answered, he is a serial liar and that is the 2nd time his Greek grandfather has died this year”BackgroundIn 2000 I was doing what you could loosely call Exec Search for our business and we wanted to professionalise it and create a new business sitting outside of the main one to limit any issues of conflict of interest.We called it The Search Organisation and started looking for a person to lead it as we had no one internally.We found a guy called JP, he had worked at Yellow Pages and moved into Search for 3 years a company based in Winchester. Young but mature for his age, imposing 6ft 3, well spoken, gave examples of assignments undertaken the process he followed, challenges faced and overcome. RFL was company dissolved as owner divorced and went abroad. He was a complete believer in structure and discipline, did martial arts etc He had 3 interviews with us and we had no other candidates. One of my colleagues gut instinct was that he was very plausible – but…. And couldn’t put her finger on it. The rest of us thought he was the person for the job. So we offered him the role subject to references etc. He was able to start immediately – so he did while we tried to take up references. Yellow Pages wouldn’t speak to us and only confirmed the dates he worked there, salary etc. No sick days impressed us. The search firm became impossible as it no longer existed, LinkedIn wasn’t around so couldn’t trace people and the owner had gone abroad. JP said he had no number to get his ex boss on since he didn’t want to be traced by ex wife. So lazily we left it – what a mistake He ended up recruiting 3 of our best pfj consultants to The Search Organisation, spent 3 months training them in search – it is such a discipline that you can’t move on until expert at each level. In the meantime I was introducing JP to senior execs at our closest clients and we were being given a number of assignments. What transpired was that it became clear that he knew what it said in the training manual he used, but in practice he wasn’t quite as good. He used impressive language but didn’t understand what he was saying and was a bully. The team of previously successful consultants were his researchers and had literally come under his spell – the wheels were coming off fast. He also became quite aggressive to me or anyone who challenged him. Why it took me so long to say adios – was a weakness. The cost, about £450k in lost revenue for the 3 consultants who were doing well before transferred, salaries and set up costs.Damage to our/my reputation was extensive. The feedback from clients was awful. Yours truly had to spend 4 months completing (and in 2 cases starting and completing assignments). Lesson learned – however convenient something seems – fight impulsiveness, don’t recruit strategically important roles unless everyone 100%, if you can’t get references – don’t recruit, if they are difficult to get – be careful. If you have a non exec – get them involved in senior hire recruiting !
- My definition of a recruitment mistake is someone who underperforms in some wayThose that fail probationThose that leave while under performance objectives – if it gets to 2nd stage – 100% leaveThose with impressive and verified track records, that we pay out of structure packages to get – who perform ok, but not as before – in meantime others noses out of jointThose for roles that need skill sets we are unfamiliar with – HR, IT, Finance – and failThose that join and leave for non recruitment job in 1st yearCHARTSo mistakes here are:10% who failed probation24% who join other rec cons (70% of 34%)7.5% who left recruitment (25% left in 12 months)=36.5% of leavers are recruitment mistakes which is 7 people
- References – JP example alreadySkill set – Irene, Rob, PaulTime pressure – rushed process, training date to hitRecent Joiner – unproven, recommends colleague – process not as enquiring – SW who went to LFPressure to fill empty desk – taking the best that have seenSenior manager over ruling others with their influence, questioning others judgementManager strongly wanting someone and saying back her judgement to take a riskSuccess in other areas of recruitment doesn’t necessarily follow – construction, public sector, hospitality –
- Went to lunch