With spiralling inflation and a skills shortage pushing up salary expectations in the electronics, SMPS, UPS, RF and semiconductor sectors, you’d be forgiven for trying to keep pay for new roles down. However, paying less than the current market rate in such a competitive industry can lead to inevitable hiring delays. And these delays bring their own costs.
The recruitment industry is obsessed with talking about the ‘true cost of recruitment’. With salary, benefits, NI contributions, recruiter fees and training costs included, the British Business Bank estimates it costs £62,890 to recruit a full-time employee on the UK average salary. But what about the cost of NOT hiring? That’s something to think about, too.
Empty chairs cost you money
As a growing business in the electronics industry, you might need a new hire but be reluctant to pay the market rate. Alternatively, you may have an idea of what you want to pay based on your internal salary scale, but that might not be enough to interest passive or active candidates.
We understand that hiring can be expensive and that you want to reduce your costs as much as you can, but there’s also a big opportunity cost to not hiring. You might want to try and save £5,000 a year on a salary, but that saving will quickly disappear when it takes three months to fill the role. Empty chair time/cost is real and it’s something employers should think carefully about.
What are the costs of not hiring
Calculating the opportunity cost to your business when a position is left open for longer than necessary is not straightforward. There are several different factors to think about and many are not easy to quantify, particularly if the role is not directly revenue-generating.
However, some potential costs of not hiring include:
- The redistribution of work - Other team members bear the burden of covering the open vacancy, which increases the time it takes to complete their own work.
- Increased stress - As employees stretch themselves to cover the extra work, they become more stressed and their productivity and wellbeing can suffer.
- Late project delivery - Staff shortages can affect your ability to complete projects on time, potentially leading to dissatisfied customers who take their business elsewhere.
- Increased personnel costs - As stress increases, so does absenteeism and staff turnover. The employees you’re asking to cover the vacancy may become resentful towards the company and look elsewhere.
The inability to capitalise on opportunities - A company that’s struggling to meet its existing commitments can find it difficult to explore new business opportunities.
PER International can help
Offering a lower salary for an open position might seem like a sensible way to reduce your wage bill, but if it leads to recruitment delays, or worse still, a bad hire, the costs will far outweigh any saving.
Research suggests that the costs associated with lost business, reduced productivity and increased workplace stress are a minimum of 1.5 more than the total cost of replacing key team members over one year.
So, while you may want to pay an SMPS field application engineer £45,000 rather than £50,000, the six months you’re without a new candidate could cost you £35,000 or more, and all for an initial £5,000 saving.
As a specialist power electronics, SMPS, UPS, RF and semiconductor recruiter, we know exactly how much you need to offer to hire the best talent without paying more than you need to. Talk to us about our salary benchmarking and find out more about the client journey.
