Unlocking Productivity and Growth: Fixing the Three Big Causes of an Ineffecient Workforce in STEM Markets
Did you know that top talent in Science, Technology, Engineering and Mathematics (STEM) is 8 times more productive than the average employee? 1
In 2019, an average software employee in a SaaS organisation generated $199k of revenue2. A top employee? $1.6M a year. Now that is a competitive edge! It's no surprise that 85% of CEOs say that attracting top talent is critial to building a high-performance culture.
Unfortunately, most companies struggle to find high-performing employees. According to Gallup, 53% of workers put in the bare minimum of effort to do their job. Three out of every four workers would not be rehired say managers and one out of every five people fail probation, according to the CIPD.
"3 out of 4 employees would not be a rehire according to managers"
What is the cost? Mis-hires cost 4 to 14 times base salary, according to the CIPD, when agency costs, HR’s time, interviewers' time, tests, salaries, benefits, VISA fees, loss of productivity, loss of innovation, harm caused by misconduct and loss of intellectual property are accounted for. At the market rate for an average STEM (Science, Technology, Engineering and Mathematics) salary, just 10 mis-hires may lose your business between £2.4M to £8.4M in revenue.
There’s also a personal angel to consider. Executive careers and reputations may be rapidly derailed if sales targets are not met, customer retention levels fall and product is late or over budget.
So you might be asking yourself exactly why do the majority of companies struggle to hire top talent? I think there are three major factor, but first a brief remark.
In this article I'll refer to 'the recruitment operation', by this I mean every one involved in making hiring happen. Depending on your business this could be hiring managers, interviewers, heads of division, recruiters, HR partners, coordinators, compensation and benefits manager, relocation and VISA manager. So with that said onto the first key cause, skills shortage.
Skills Shortage
The first major problem is a lack of skilled workers. According to the UK Commission for Employment and Skills (UKCES), 43 percent of STEM job openings are difficult to fill owing to a lack of qualified candidates.
As a result, the rivalry for elite STEM talent is strong. 7/10 HR directors and decision makers stated it has been challenging to employ people with STEM abilities in the past year, and 9 out of 10 said the process is taking longer than expected.
"85% of CEOs say that attracting top talent is key to building a high performance culture"
Over the next decade, more over half (56 percent) anticipate the STEM skills shortfall to worsen. Meanwhile, the sector's expansion is expected to treble the number of jobs by 2028.
Only recruiting operations that are built for the realities of a competitive STEM market will be able to hire top talent. So, how can you acheive this? That brings us to the second culprit, noise and misinformation.
Noise and Misinformation
When Googling "assessment design" the results are as varied as they are unending. Among these are psychometric test, personality tests, cognitive ability test, technical test, coding interviews, pair programming interviews, presentations, competency interviews, behavioral interviews, brain teasers, assessment centres, panel interviews, group activities, job auditions, video interviewing, job simulation and AI . Each category has a subcategory, and each subcategory includes several vendors offering a variety of possibilities.
Unfortunately, there is a "concerning lack of evidence"3 that many popular assessments are valid, and far too few managers are well-versed in the area. According to a poll of hiring managers conducted by HRS, 47% of recruiting managers had never received interview training.
Remember, this is just one aspect of recruiting; there is also employer value proposition, employer branding, candidate experience, relocation, compensation, benefits, VISA, head hunting, sourcing, recruitment agencies, and so on. Each having an equal number of options as the previous. No one shows you how the different options compare to one another or how they might be combined. And nobody tells you what’s best for your business. It's no surprise that some businesses struggle to attract the best of the best when there's a bewildering array of options and misinformation.
To enjoy the benefits of hyperproductivity and growth, you must be able to break through the noise with a recruitment approach tailored to the unique needs of the STEM labour market. This leads us to the third cause: a broken recruitment model.
An Ineffective Recruitment Model
The wrong recruiting model is the third major factor. One of the causes for recruiting failure is that the system fails to detect changes or restricts a hiring teams' ability to respond to the situation at hand.
These situation include exogenous things like your competitors' activity, government legislation or anything else that has an influence on the availability of talent. In addition to these external factors, there are endogenous influences that may affect your ability to attract talent such as the motivations, attitudes, mindsets and abilities of the people involved in recruiting. Because these dynamics vary by position and perios, each vacancy's hiring is as distinct as the next.
"10 mis-hires cost between £2.4M to £8.4M in revenue"
A conventional recruiting approach is incapable of appropriately adapting to change. This limits your capacity to employ quickly in the competitive STEM market. You lose top people and are dragged into the day-to-day operations of recruiting, which takes you away from your primary focus: organisational strategy.
Summary
In this article we've seen that top STEM talent is 8 times more productive than the average STEM employee. Unfortunately, however, most companies don't know how to hire top talent as 3 out of 4 employees would not be a rehire according to managers.
We looked at three big but fixable reasons as to why companies fail to hire top talent; skills shortage; misinformation and an inappropriate recruitment model.
If you want to break out of stagnant or slow growth, unlock the full potential of your business and build a hyperproductive culture, you’ll need to make a change to the way you are doing things.
