With the negative impact of coronavirus on the UK economy meant to be a 9.5% reduction in GDP, but the real cost not yet being known, every penny you can save may make the difference between you and your competitors chances of survival. One of the biggest expenses for UK companies is that of rehiring, it being estimated as costing £1.13 billion every year. With greater options for rehiring being created every year, it may now be the modern solution that will make sure you stay a step ahead.
With industry changing faster than ever, the skill gap in your business is growing bigger every year. It has been forecast that up to 14% of the current global workforce will have to change careers, and that many more will have to learn new skills within their current occupation. This means that knowing when to rehire and when to retrain is essential, but there is an increasing recognition by the government and other financial entities that the UK workforce must begin to retrain to keep up with the rapidly increasing automation of industry.
The True Cost of Rehiring
Due to this rapidly changing market, it is almost certain that all of your competitors will be looking to fill the same skill gap each year. However, due to nature of evolving industries, those with the skills to fill the ever growing skill gaps are rare. This means that hiring experienced employees with the specific skills that your business needs, who also fit in with your business culture, is increasingly difficult. Furthermore, when the right candidate is available, they are in demand from multiple different organisations, raising their salary beyond its worth.
The hiring process in itself is a major risk for employers due to the extortionate length of time it takes to find and hire the right candidate. On average, to screen CVs, process interviews, check references, test the candidates skills, choose a candidate, negotiate an offer and wait for confirmation takes a minimum average of 6 working weeks. When you take into account the additional four weeks you have to wait for their leaving notice to complete, you have taken the total time to 10 weeks. This means that you are spending a minimum of 10 weeks without the skills that you need, and lose a minimum of 6 weeks from one of your other employees to find and process that candidate.
One study found that for every new employee transferring into a moderately experienced position, it takes an average of 30 weeks to reach maximum productivity. This is largely due to the time it takes to adapt to the business culture, to working with their coworkers, and to the tasks of their new job role. When this is taken into account, the notion of rehiring reveals itself as a part myth, as every new employee has to go through a process of training to adapt to their new job.
But How Much Does Retraining Cost?
With the government recognising the growing necessity of re-skilling and retraining the UK workforce, the options for employees are evolving every year. Choices include everything from an intensive course to an adult apprenticeship.
For the intensive courses, depending on the level qualification they are receiving in the training, the courses take between 8 and 12 weeks, at an expense of between £15,000 and £25,000. When compared to the £30,000 to £40,000 price tag, estimated by Oxford Business, on the cost of rehiring an employee, there is only a minor improvement in favour of rehiring once their lost labour is taken into account. However, you don’t have the period of transition that is inevitable in a new hire, and you lose the risk of the employee not fitting in with the business culture, which would force you to start the whole process again.
If you are better prepared, the far greater option is the adult apprenticeship which has dramatically evolved over the previous few years. Although they usually take between one or two years to complete, the employee spends four-fifths of the apprenticeship still in work. This equates to around 3 months worth of labour time spent training. However, modern apprenticeships are incredibly adaptable, so you can just constantly ask your training provider to add in any new skills that you need which emerge during the apprenticeship. Furthermore, due to their incredible success, the government has invested in covering either most or all of the training costs, along with a multitude of grants to encourage more retraining through apprenticeships.
Not only are apprenticeships massively beneficially and the cheaper training option, but they increase loyalty from the apprentice. It is reported that 94% of employees who were invested in through retraining were far more likely to stay longer at the company. After the costs of an employee leaving are taken into account, choosing rehiring over retraining is a no-brainer.