There is a case to be made for hiring employees yourself. If you have the resources to dedicate to an HR team, you might as well invest in one for all current and future hiring needs. For most small to mid sized organizations though, this doesn’t necessarily make sense. If you want to do it well- hiring takes a tremendous amount of time and money and you may find stronger candidates if you let somebody else do it. Aside from saving yourself the hassle and stress of perfecting your job description, sifting through applications, interviewing, eliminating, interviewing again-- allowing someone else to source candidates for you could be crucial to your company’s success, especially if diversity is important to your company.
If you want to do hiring well- it takes a tremendous amount of time and money. The average hiring process in the U.S in 2018 was 23.8 days. For more specialized jobs- the wait is even longer. Hiring for a waiter takes an average of 8 days while hiring for a business analyst takes around 44.8 days. Small business owners spend around 40% of their working hours on tasks that don’t generate income, including hiring. The overall cost of hiring an employee depends on your industry and skill level, but the National Association of Colleges and Employers estimated that hiring an employee in a company with 0-500 people costs about $7,645. Glassdoor’s estimate was a bit lower, around $4,000. It’s also incredibly easy to miss good candidates if you’re doing your own hiring. This is especially true if you’re using some kind of software to judge candidates before manually looking through the applications. A Guardian study recently estimated that 72% of CVs don’t ever reach human eyes- meaning a good chunk of applications you receive are tossed aside before your team looks at them.
Many commonly used Applicant Tracking Systems have massive set backs- especially when it comes to diverse candidates. Keyword matching systems that match job descriptions to resumés are not incredibly sophisticated and can often simply give you the candidates who were keen enough to copy and paste the job description into their profile. Video interviewing systems are increasingly popular- with companies offering to analyse your top performers and identify their language, affect, movements, etc. However- these often don’t account for facial, linguistic, and other differences across gender, race, and culture. AI systems that judge resumés on language and presentation are also deeply flawed- read about Amazon’s issues here (link to AI/hiring blog). Systems that judge language, qualifications, and skills have been consistently proven to be biased against women, who tend to use more collective language and state less skills on their resumés. All of this is just to say- most commonly used softwares aren’t perfect when it comes to judging resumés, and you could be missing crucial candidates because of them.
One of the most common modes of hiring is referrals. It makes perfect sense- if your current employees are thriving, a referral seems like a clear choice when looking for a new hire. It’ll allow you to hire someone who isn’t a total stranger, as well as increase your chances of the new hire being a contributing member of your team. Employees hired via referrals have been proven to be more engaged, and you can safely assume that they’re likely to be a cultural fit for your company. However- referral hiring may be getting in the way of your diversity goals and pay parity goals. Referrals overwhelmingly benefit white men- who receive 40% of successful referrals. 30% of successful referrals go to white women, 17% to black men, and just 13% to black women. Your employees are very likely to have networks that look a lot like them- individuals who were educated in the same places, come from the same fields, or worked at previous firms with them. If you function in a highly male dominated field like technology or financial services- referrals might not be in your best interest.
Not only are white, male employees more likely to be the subjects of successful referrals, but when referred by a business associate- they receive an average salary increase of $8,200. Women, on the other hand, receive about $3,700. So if pay parity is one of your goals for the decade- be careful hiring from referrals and be mindful as you negotiate salaries with them. This is not to say that you can’t hire from referrals ever- but it may be getting in the way of your company's diversity goals and profitability. Employees with existing contacts within the company will be able to hit the ground running a little faster than brand new employees, and they’ll also have an existing support or even mentoring structure within the company. Although it may be unintentional- they are often set up for more success in the company than other employees.
The case for diversity in business has largely been made. Diverse teams are more innovative and often more profitable. Companies with diverse management teams pull in up to 20% more revenue, and are 1.7 times more likely to be innovative leaders in their fields. It simply matters that you have diverse, global perspectives on your teams and that your teams are not filled with people who have the same perspectives and experiences- but rather individuals who will challenge one another and help you grow. One of the best ways to increase diversity at all levels of your organization is to make it an explicit goal when searching for new hires.
The biggest reason to not do hiring yourself? You just don’t need to. It costs a tremendous amount of money and time to post jobs, sort and review resumes (manually or via software), screen candidates, and hire them. If you’ve created a separate HR team responsible for hiring, then you’re paying for more salaries, software, and resources to hire employees. For most firms- this will drastically change your capacity to invest in other parts of your company. In addition to all of this- hiring is always a gamble. There is often a rush to fill positions quickly which can be damaging in the long term. 41% of companies report that a bad hire has cost them at least $25,000, and another 25% report that a bad hire has cost them at least $50,000. Nearly 40% of these bad hires were as a result of a company needing to fill a role quickly. When someone else hires for you- you typically don’t pay them until they’ve found you a successful candidate that you like (or several candidates), they’re not as distracted or pressed by the urgency to fill a role (and they can usually execute it quicker than you can while you try to run your business simultaneously), and they can provide a more objective view on loaded ideas like cultural fitness and compatibility. Candidates offered by hired firms may be people you otherwise wouldn’t consider, or who’s resumés you wouldn't have even gotten to see. So, in conclusion, do you have an open spot to fill? Get in touch. Let us worry about hiring, while you run your business.