Rush to recruit is costing organisations millions of dollars, PwC report says

Rush to recruit is costing organisations millions of dollars, PwC report says

PwC’s ‘Key Trends in Human Capital’ reveals that many organisations are following an habitual pattern as economic conditions improve – they rush to recruit as soon as growth returns, a PwC`s press release says.

Organisations feel the need to compensate for workforce cutbacks made during the recession, but also to counter the effect of a rising resignation rate as disaffected employees who had remained during difficult times begin to look for new opportunities. The result, according to the report, is a growing global talent war.

PwC argues in the report that organisations have much to gain by breaking this habit. By concentrating initially on growth from existing human capital resources, before then growing the workforce at a slower rate, organisations can achieve a significant improvement in Human Capital Return On Investment – the profit returned per unit of currency spent on employees.

PwC analysis shows that a failure to apply these ‘smart growth’ principles is costing organisations in every sector – over $50,000 marginal profit per employee in the banking sector, for example, and $104,550 per employee in the utilities sector.

Anthony Bruce, Global HR and Workforce Analytics Leader at PwC, says:“It’s the human capital decisions that businesses make as economies emerge from recession that separates the best from the rest. This won’t have been the first recession that most businesses have experienced and many will do what they always do when the recovery arrives – they recruit to grow. Our data shows that this is already happening and the competition for talent is intense”.

“We need to break this habit. There’s another way. The organisations that will outperform everyone else over the coming years will be those that successfully make the transition from ‘doing the same with less’, as they did during the recessionary years, to ‘doing more with the same’.” he concluded.