Recruitment Risks

ASIA PACIFIC FOCUS - Taufik Arief, president, People Search Indonesia on making recruitment work.

Every employer expects to hire the most suitable talents for them in the shortest possible recruitment time. Then they want that talent to stay at the company as long as possible, continuously giving a positive contribution to company throughout their stay. However, the fact is a significant number of hiring processes do not produce this outcome. Some factors might influence it such as assessment skill, the number of good quality applicants, employer branding, quality of database, recruitment business process, hiring-manager commitment and so on.

However, through continuous interaction and observation of our clients, we have identified a lot of potential risks that might jeopardize an employer’s expected hiring outcome. These can be mis-hire, a prolonged recruitment process, quick resignation and others. What follows is a short list of some of the major risks in the recruitment cycle, created as a framework to help – and others – manage these risks more effectively. 

1: Mis-hire

Mis-hiring is costly for an employer, financially and in other ways such as the organisation’s inability to achieve business objectives and the presence of a negative working environment. If a mis-hire happens for a senior role, the negative impact will be even bigger.

To manage this risk, employers should set a high standard of employee assessment process, utilising credible techniques and tools. Companies should perform effective reference checks with previous employers, clients and other relevant stakeholders. Background checking is also necessary to identify fraud such as fake education certificate or false previous employment information.

Simultaneously, an employer needs to expand their talent pool, to view more people rather than limiting themselves to low quality applicants. It’s not enough to have strong assessment processes if the overall quality of applicants is not sufficiently high enough in the first place.

Hiring managers should be accountable for recruiting their staff, even when they receive assistance from a recruiter. Giving direction, such as a clear job description, expected competencies and other preferences will help in this. They should also provide enough time to finish a quality recruitment cycle, including analysing resumes, interviewing candidates and giving feedback to recruiters in order to get right the right talent on board.

2: Inability to source and reach expected talents

The inability to reach the right talent pools can lead to mis-hiring. For an employer to limit themselves to a certain channel might block them from reaching the best talents. Recruiters needs to actively utilise diverse channels such as social media, job portals and offline recruitment activities. At the present time, with a lot of social media options, recruiters need to learn how to use these channels to get good prospects.

Companies should set up good long term partnerships with the right executive search firms and education centres who can sustainably offer good applicants. Meanwhile, creating an employee referral programme is also a good option for the company. Staff know their company well and can identify and refer the right people. Never forget to strengthen employer branding. Strong employer branding will be a strong magnet to attract best talents to join the organisation.

3: Quick resignation

Nothing hurts us more than seeing our good talent leave the business instantly (perhaps during probationary periods). This situation can happen due to internal and external factors. Talent might be re-hired by their previous employer or another job offer may come along.

Employers cannot manage external factors, but there are many things that are within their control. The company can pay their promised commitment to staff, which could involve a particular working arrangement, office facility or benefit. New hires might lose their appetite for work instantly if they realise the employer has breached a commitment in the very first few days or weeks of their employment. 

Companies need to manage staff expectations from the beginning, even during the interview process and before signing any employment contract. Candidates need to know everything possible about their new company culture, the business situation, ways to deal with superiors, subordinates
and peers. 

If a recruiter can set up a comprehensive on-boarding package, the new hire might sense better company credibility. A peer coaching and/or buddy programme can help the new hire adapt and integrate into the organisation. There must also be an effective feedback loop between employer and staff, especially in early period of employment.

4: Prolonged recruitment process: lost opportunity and negative environment

Business departments without effective leadership and management will never reach the optimum result and create lost opportunity. A lot of tension can emerge if a supervisor has to take up the slack created by poor leadership while prolonging the hiring process – through a lack of decision making – creates more pain to company and staff alike.

One fundamental way to handle this is to strengthen the talent database. A good database will enable the recruiter and hiring manager to retrieve good applicants whether they’ve just sent in their CV or if they’ve been processed in the past.

Also, both the recruiter and hiring manager can continuously network with talent in the market even if there are no current vacancies. This enables them to identify potential staff in the future and engage with them from the very beginning.

To speed up the process, companies can partner closely with search firms and education centres, while at the same time ensure their own employee referral programme is effective.

5: Over-valued and overpaid talents

Sometimes, during post recruitment process, we realise that we are paying people too much. To manage this risk, management should perform continuous salary surveys and benchmark themselves in the marketplace. Hiring managers and recruiters can also strengthen their assessment skills in order to get the correct valuation of an applicant.

Recruiters should also upgrade their negotiation skills with candidates and be creative in proposing a less expensive solution to applicants. Companies also need to perform reference and background checks of the candidates particularly with regard to their current compensation and benefit, avoiding any inflated wage disclosed by applicant.

6: Employer branding

Having a negative employer brand destroys a company’s ability to attract and pull good talents to the organisation. I have seen many times with clients, when talents have a negative perception about the company or their leaders and it can take months or years to recover the situation. 

Companies need to set their communication strategy and determine the right channel to convey the Employee Value Proposition (EVP), corporate culture and business direction to potential applicants. Companies often work to share the EVP with their junior staff, but do not put in sufficient effort to do this with their middle and upper management grade.

Ask staff/leaders to share their successful career story in the company as this will provide a vivid example which will inspire more talent to join the organisation.

Companies must also treat all applicants professionally. This shall be applicable to every part of the recruitment chain, when appoaching people, receiving CVs, interviewing, negotiating and closing deals. If you have to reject an applicant, do it professionally – send a formal email or call them if necessary. People will share how they are treated by employer during recruitment process to others while small, negative issues can go viral.

7: Legal risk related with employment

The wrong recruitment process might lead to legal issues. Companies need to fully understand about the applicable labour law and other associated regulation. Employers need to ensure the employment contract is aligned with present labour law. If you are a regional recruiter you need to understand the applicable law in the country you are hiring in, work together with local lawyers who can highlight the applicable regulation for you.

In a situation where a legal risk is identified, your process should raise a ‘yellow or red flag’. By learning from this process we can gradually recognise employees who carry legal exposure for the company and employer from the start. For example, an employee who has a covenant in their employment agreement with their previous employer not to join their competitor, but choose not disclose to potential employer might create legal exposure in the future. We had better tackle this quickly.