Talent is the most important weapon in a Procurement team's arsenal. Even in an era of unceasing technological advancement, there's no replacing a dedicated and collaborative team of professionals.
CPOs generally recognize this. Faced with an ever-widening talent gap, they're increasingly focused on pursuing and developing new hires. PWC reports that a whopping 93% of executives recognize the need to amend their talent management strategies. Only 39%, however, believe they've actually taken steps to do so.
Procurement's duties are constantly growing more diverse and demanding. That means locating the right talent is more important than ever, and making the wrong hiring decisions can prove all the more costly. So what do Procurement teams stand to lose?
An easy way to quantify the cost of an unproductive hire is to take a look at their salary. That number, however, is just the tip of the iceberg when it comes to bottom line impact. A lazy, ill-suited, or unmotivated employee will continually affect the performance of anyone who relies on them. If they can't be counted on to do their job, it'll become harder and harder for adjacent employees to do theirs. As everyone above and below your new hire struggles to pick up the slack, losses will continue to pile up. What's more, this bad hire can easily infect their co-workers with a bad attitude and bad work habits. Proudfood Consulting reports that almost 29% of company time is unproductive already. Don't let a bad hire make that number even higher within your organization.
Unsurprisingly, Procurement professionals don't respond well when they're forced to cover for an unproductive or disinterested co-worker. A 2015 study by the Society for Human Resource Management found that morale was number one concern for surveyed CPOs. 39% of respondents identified it as the most troubling consequence of a bad hire. That's almost 15% more than selected monetary concerns. It's essential to take action as soon as morale begins to tip. Failing to make the appropriate moves will quickly compound issues like disengagement and dissatisfaction. Your Procurement team will not only begin to follow the bad hire's lead, they'll likely feel hung out to dry if their manager does nothing to rectify the situation.
According to Inc., 69% of candidates will not accept offers from organizations with 'bad' reputations. Today's job seekers aren't just using social networks to promote themselves. They're also employing them as a tool for assessing potential employers. If a bad hire is wreaking havoc throughout your office, it's entirely possible that a current employee has aired their grievances online. As a result, you'll not only lose the respect and investment of your current staff, but you'll also discourage prospective candidates from coming aboard. Building a reputation for instability, high turnover rates, and volatile internal culture is a surefire way to prevent applications and damage your organization's public perception.
4. Client Relationships
Even long-standing partnerships can suffer and die when the wrong individual joins your Procurement team. 74% of respondents in a recent CareerBuilder survey reported feeling the effects of a poor hiring decision. Of these, 22% described particular damage to their existing business relationships. Your clients trust you support them with the best resources possible. Presenting them with unsatisfactory talent could put considerable strain on your alliance, and - in extreme cases - lead them to cut ties with your organization. Once one client grows unhappy, word will spread fast. As you become known for disappointing your clients and making poor hiring decisions, it will grow harder and harder to win new business and drive positive change in existing relationships.
5. The Bottom Line
Money isn't everything, but you'll certainly miss the cash spent recruiting, training, and hiring, and ultimately firing the wrong person. Over 40% of CFOs surveyed by CareerBuilder blame bad hires for at least $25,00 in annual losses. 24% report direct losses of over $50,000. Combined with lost revenue, lost time, and damaged business relationships, these lost savings will add up quickly and contribute to an increasingly chaotic workplace.
So how can companies avoid bad hires without overworking their HR departments? They may want to consider leveraging the services of a Procurement recruiter. A 2017 Robert Half study of found that 79% of companies credit these individuals with locating candidates they could not have found on their own.
Source One's Procurement recruiters have helped companies in countless industries find the right talent without exhausting their internal resources. Contact our staffing experts today. We'll not only help you avoid the wrong hire, but ensure you select a long-term, strategic asset.