How to hire great people – ALWAYS

“Human Resources is the greatest asset an organization has and it is the only asset that appreciates daily.”

Problem Statement

Problem Statement 1: “How to

hire great people”

+Problem Statement 2: “Always”

Problem StatementIt is important to understand there

are two problem statements here. We can hire great people

sometimes due to various reasons ◦Strong referral◦Chance (right time, right job, right

people applied)◦Any other reason

However, to hire great people “Always”, we need a process.

ProcessStage 1: Planning

Identify need for recruitment (open

position)

Develop JD

Activities, sources and timelines

Select interviewers

Stage 2: Recruitment

Job posting, attract potential

employees

Initial Screening

Interviews

Stage 3: Finalize

Select from interviewed pool

Reference checksNegotiation and

Roll out

Business Case for the processThis process makes sure that we

“always” hire great people. Now that we identified a process for hiring great people always, we need to evaluate the Business Case for this.

The following approach is considered for the Business Case:

Cost of the Process vs Return on Investment (ROI)

Cost of Process (per candidate)Stage Steps Involved Cost

(Man Days)

Cost (Rs)

Stage 1 - Planning

Identify need for recruitment (open position)

2

Develop JD 0.5

Activities, Sources and Timelines 0.5

Select Interviewers 0.5

Stage 2 - Recruitment

Job posting, attract potential employees 2 500

Screening Candidates 1

Interviews 4

Stage 3 – Finalize

Select from interviewed Candidates 1

Reference Checks (Outsource) 100

Negotiation and Rollout 1

Total 12.5 600

Assumptions• Cost of Background check assumed at Rs.100/ candidate based on data from discussion forums•Portal cost assumptions• Rs. 50000 - annual subscription• 100 candidates recruited per year• Hence, cost per candidate is Rs.500

•Man days to Rupees Conversion• Average salary of employee is 10 LPA• Average salary of employee per man day is Rs.3333(10

L/300 working days)

Category Cost(Rs.)

Man days (12.5 man days)

41666

Subscription and other costs

600

Total Rs.42266

Cost of Recruiting wrong candidate

•Entire hiring process needs to be run again (for hiring a fresh candidate as replacement) : Rs.42266•We lose a 6 month period (assumption based on research) before we realize the candidate selected is a wrong hire• 150 man days (Rs.499950)

•Probability of a candidate being a wrong hire is 0.2 (1 out of every 5 hires).

•So, total cost is :Specifications Cost

Iterating Recruitment process

42266

Lost Time due to wrong hire

499950

Total cost 542216

Net cost (probability of 0.2)

108443.2

Business Case Evaluation

Cost of Following process for “Hiring Great People Always”

42266 Rs

Cost of “Not Hiring Great People Always” (cost of not following process and hence hiring wrong candidates)

108443.2 Rs

•Hence there is a clear Business Case for Hiring Great People Always•The opportunity cost of not hiring great people Always is huge as mentioned above

References https://www.adp.com/tools-and-resources/calculators-and-tools/~/

media/PDF/ADP%202009%20Screening%20Index.ashx http://

articles.economictimes.indiatimes.com/2013-01-21/news/36462889_1_verification-employee-fraud-koramangala

http://www.executiveboard.com/blogs/one-in-five-hires-are-bad-hires-2/

http://www.ere.net/2013/10/28/get-rid-of-your-bad-hires-quickly-with-a-no-fault-divorce-process/

http://www.citehr.com/110974-job-portals-costs-service-tax.html