…so is the war for talent. That’s according to the PriceWaterhousecoopers Saratoga survey on the subject. Saratoga’s 2007-2008 Human Capital Effectiveness Report contains results from over 300 organizations, a majority of in the Fortune 1000.
From these numbers, it appears that even as employers spend more and become more desperate to hire, they’re employing fewer quality controls and thus making more hiring mistakes. Check it out:
Cost per hire increased from $2,615 in 2005 to $2,764 in 2006, according to Saratoga 2006/2007 Human Capital Index Report*.
Lack of post-hire quality assessments– Although companies continue to invest a greater amount of resources into hiring, 61% of companies surveyed reported they did not assess the quality of these decisions post-hire.
Turnover – While nearly one in ten employees (8.5%) left within 90 days of joining a new employer, nearly one third (29%) left within their first year of service suggesting poor quality of hire. A majority of organizations’ cost of turnover estimates range from 1/2 to 1-1/2 times a departing employee’s salary depending on their level, tenure, and experience. The cost of losing these employees has significant impact to organizations and includes recruiter time and expenses, lost time for the new hires work team to interview and train the new hire, and on-boarding and orientation costs among others.
Keeping employees on the job– Organizations seem to be retaining what they can of their current workforce. The percentage of employees leaving the organization involuntarily (e.g., layoff, dismissal, death) has decreased four years in a row to its current rate of 3.2% – a drop of 36% since 2003.
Graying of the Workforce
The percentage of employees eligible for retirement in the next five years increased to 22% in 2006 – an increase of more than 25% in the last two years alone.
A Buyers’ (Employee) Market
Offer acceptance rates have decreased each year since 2003 and at 91% are at their lowest rate since the dot com bubble of 2000. Employees are finding more opportunities in the job market each year and that retiring employees are adding to the talent shortage.
Voluntary separation rates remained consistent in 2005 (10.5%) and 2006 (10.4%). However, one in ten employees voluntarily left their employers in 2006 and has generally been on the rise since 2003 with a compound annual growth rate of 4.3%.
#1 Operating Expense
For the past four years, the single largest expense for organizations has been workforce compensation and benefit costs, accounting for over 35% of operating expenses.