Recruitment Programs for Jansan Distributors

Is There A Magic Formula?

Most distributors are well aware that it can take time – and a lot of luck – to hire a new employee. However, they may not be aware of just how much hiring that new staffer may cost.

According to the National Association of Colleges and Employers (NACE), recruiting a new employee for a company with fewer than 500 employees can cost a staggering $7,645. These costs can include college recruiting salaries, expense reimbursement, travel expenses for the new hire, relocation, etc.

But wait, that’s not all. NACE says distributors and other employers may be confronted with the following additional expenses once the new employee is hired:

Training costs
While these can vary widely by organization, average annual training costs per employee range from $1000 to $1500. And, these training costs may be higher for entry-level employees.

Payments to recruiters
Many distributorship owners turn to recruiters to hire new staffers, especially salespeople. However, recruiters are paid based on the salary of the new hire, which can be as much as 25 per cent of the first year’s salary.

Recurring expenses
There are a number of ongoing costs associated with hiring a new staffer, including workers’ compensation insurance, unemployment taxes, social security taxes and Medicare. Add to this health insurance, vacations, tuition or training reimbursement, sick time, etc., and these recurring expenses can amount to as much as 40 per cent of the staffer’s paid salary.*

Bad hire
Distributors and employees have all been in situations where for one reason or another the new staffer just does not work out. According to Careerbuilder.com, which is an online job site for the U.S. labour market, 41 per cent of these “bad hires,” as they are referred to, cost employers at least $25,000. Furthermore, 25 per cent of employers reported having a bad hire in the past year that has cost them as much as $50,000.

Turnover
The median length of time workers stay at one job is 5.4 years, according to 2012 statistics from the non-partisan Employee Benefit Research Institute in the U.S. This figure is actually up somewhat, due to the poor economy and workers trying to hold on to their positions. But once they leave and if they must be replaced, distributors and other employers have to start all over, meeting the same costs and expenses mentioned above. (See Sidebar: You Be The Boss… What Would You Do?)

We should note that many smaller distributorships try to avoid the many costs of hiring a new worker by developing their own in-house hiring and recruitment programs. They look for someone that is already trained for the skills needed and hire directly, instead of going through a recruiter or related service. However, invariably they find this is a very time-consuming process, requiring far more resources than anticipated and, worse, it is not always effective.

This confirms two very important things when it comes to hiring a new employee for a distributorship:

  • The decision to hire a new employee should not be taken lightly; and,
  • The initial focus of employers is not on what type of employee they are looking for, but instead finding a hiring process that is both efficient and results in long-term employee retention.

OPTIONS

As we can see, the hiring process is laden with expensive pot-holes and few jansan distributors report finding any “magic formula” that has worked for them. Even if they believe they have it, in time this “magic formula” will probably fail because, very simply, there is none.

However, there are some programs and “processes” currently available that can help, possibly significantly. Plus these programs are available through some prominent industry marketing and buying groups. These programs are helping their members locate, assess and select a candidate for an open position. While these programs do not claim to be a magic formula, some can help minimize many of the costs to hire and train a new worker as discussed earlier. To ensure this result, some are even based on sales programs developed with the help of major universities across North America.

While these systems vary, the following is an example of how one of these initiatives is proving to be effective:

  • A distributor member notifies the buying/marketing group that they have a position to fill, the type of position and the skill required for the position;
  • Potential candidates are located by the marketing/buying group;
  • The marketing/buying group then screens these individuals, which includes submitting key strength assessment tests to the candidates, along with interviews by human resources personnel in the buying/marketing group;
  • Once the “vetting” process has concluded, best matches are referred to the distributor;
  • The distributor then interviews the potential candidates and makes a selection.

Is the program foolproof? Of course not. We already know there is no magic formula, and even under the best screening processes and programs, employees may be hired that do not work out or remain in the job for long. However, what these programs do is eliminate a large amount of time and trial-and-error experiences. They make the hiring process more scientific, less stressful, cost effective and specific, so that even if and when a mistake is made, it helps ensure they are few and far between.

* U.S. Bureau of Labour Statistics 2013

Jack Trimm has been responsible for human resource strategies, planning and implementation for a number of major organizations within and outside of the jansan industry. Today, he is the Director of Human Resources for AFFLINK, a sales and marketing organization for the jansan and related industries.

You Be The Boss…

What Would You Do?

We have already discussed how staff turnover, especially for those making over $50,000 per year, can be very costly as well as time consuming for all businesses, including jansan distributorships. With this in mind, we invite you to be the boss and decide how to handle the following situation: One of your “average” performing salespeople notifies you he has been offered a position with another distributorship that will start him out at five per cent more each year than he is presently earning with you. Your budget is already very tight. Considering all the issues, would you:

  • Negotiate and offer a one or two per cent raise to keep him with the company.
  • Offer nothing.
  • Match the offer and increase his pay be five per cent.
  • Tell him to take the other offer and wish him well.

Even though this worker is considered an average salesperson, in the end it will likely be less costly to you as a business owner to meet the five per cent pay increase and keep him on board.

The key reasons for this, as referenced in the article, is that it is more cost effective to keep him on board and work to improve his performance. According to 31 corporate case studies analysed by the Centre for American Progress, it may cost up to 20 per cent of this person’s annual salary, or about $10,000 to replace him. Add to that the fact that the new hire may not work out or may stay with the firm only a few years, it just makes sense as the boss to keep this person with the company.

- Reprinted from the January/February 2015 issue of Sanitation Canada


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