For organizations that hire thousands of new employees a year, one bad hire may not seem that significant, but it can actually cost thousands of dollars. When a company hires an employee who leaves after only a short time, the organization may face direct costs, including the price of hiring and onboarding, and indirect costs, such as productivity loss, potential errors, and customer dissatisfaction.
Over 60% of those who left two or more jobs within 60 days of their start date were more likely to follow that same pattern at their new employer, according to research from Equifax. Comparatively, the same research shows that longer term tenures are almost twice as likely to remain with their employer for more than 60 days. This means that data about a candidate’s previous employment, specifically how long a candidate worked in their last role, can help enable companies to make more-informed hiring decisions from the start.
For example, in the food industry, the total turnover cost for entry-level hourly employees can range from 16-30% of the individual’s annual salary. This means that it can cost more than $5,500 — and up to almost $10,300 — to replace an employee that works 30 hours a week at $22 per hour. And with turnover problems costing U.S. employers $1 trillion annually, it’s important for organizations across industries to make better-informed hiring decisions that can potentially improve employee retention rates and lower hiring costs.
Using previous employment to help enhance future retention
While creating a good experience for entry-level hourly employees may be a factor in improving retention rates, the data from Equifax helps demonstrate that a candidate’s tenure in a previous position can be a powerful indicator of how long they might stay in their next role. One way for organizations to help lower turnover in their company is through completing pre-hire verifications, which may be overlooked in the hiring process for hourly employees — even though 79% of the projected workforce is expected to be hourly. Because a history of shorter-term tenure at past jobs may be associated with lower employee retention in hourly roles, gathering this pertinent data about a candidate’s previous employment can often help organizations improve retention.
Completing pre-hire verifications is also an important tactic for organizations that are trying to manage talent acquisition expenses. Consider a large-scale food manufacturer with a substantial hiring volume, for example, an organization recruiting 10,000 non-seasonal hourly workers annually. Implementing pre-hire verifications can save such a business more than $2.5 million per year, according to data from Equifax. Verifying a potential employee’s previous employment to help better predict their future tenure outcome can help contribute to greater operational efficiency and lower turnover rates, which are crucial in the food supply chain.
How thorough hiring processes can make a difference in the food supply chain
The impact of hiring decisions extends beyond financial considerations in the food industry, as potential consequences of a misstep can sometimes reverberate throughout the food supply chain and affect millions. Every step in this supply chain is critical in helping maintain food safety standards, and any hitch in this system might impact the availability, quality, and cost of food products, which may create risks to individuals’ wellbeing and livelihoods.
Disruptions to the food supply chain may be caused by macro events like the COVID-19 pandemic or natural disasters that impact agriculture, but bad hiring decisions and high turnover also have the potential to pose significant threats to the supply chain. An underperforming employee may slow down production lines, cause errors, or even compromise food safety standards. Plus, when an employee leaves, not only is their work not completed anymore, but the organization may also have to hire and onboard a new employee to replace them.
In addition to the potential financial impact of up to more than $10,000 to replace an employee, this turnover can impact a few groups of people. There’s an immediate impact on the former employees’ direct coworkers, who may have to take on extra work, and workload may also increase for the hiring team that has to find or recruit a new employee. In the food manufacturing space, there may be an impact on the supply chain, which relies on individual workers showing up to support their part of the process. To help avoid potential disruptions and save on the cost of employee turnover, organizations should look to tools that can help them make better-informed decisions from the beginning of the hiring process.
Minimizing employee turnover is important for both an organization’s financial health and for the integrity of the food supply chain. By implementing thorough hiring processes, including pre-hire verifications that help show previous tenure patterns, companies can better identify potential risks and make more informed decisions earlier in the recruiting and hiring process. And in the food supply chain, where reliability and efficiency are essential, investing in more thorough hiring processes may translate into potentially significant savings, fewer disruptions, and a more safe, consistent supply of food for consumers.
