CEO Note

Trend – New economics of hiring: Job offers are slightly increasing and Companies as well as candidates are more careful in taking their hiring decisions which slows down the process.

With candidates we do observe a trend in our daily practice since beginning of the year we already know from economic boom times. And this that working contracts get signed but the candidate will not show up for work on the agreed date. Why is that? In good times it was a game to poker for the best offer, sometimes just to improve the salary even with current employer. Today its more about security thinking as corporate hiring decision making processes take long and candidates cannot be sure about the outcome so they better backup with the first offer they get. And if a better offer comes later the candidate hired already will not start or leave in the trial period to go work for the other company and this can be a really costly exercise.

Employers are unfortunately not protected by labor law against such risk and the company will have to bear the burden of having to re-hire for the vacant position. As Companies are already used to difficult times they are more careful with their hiring decisions. This slows down the process for all parties involved. We know that a wrong hiring decision can lead to extra costs. Only the search and selection costs of one new employee is between 15-50% of the yearly salary depending on the level of the position having to pay that twice is no fun.

CNB Labor demand and Supply economic optimum

Source: CNB Labor demand and Supply economic optimum

Especially in critical positions which cannot stay vacant, such as the worker on the production line the damage to the productivity of the company can be huge or imagine the new executive who doesn’t show up to take over his new car, office, team and the headhunter had been paid already. Legally a candidate who decides to not start in a job should at least resign from the working contract in writing before the starting date. But as the non-commencement of the working contract is always one-sided and there is no possibility to sanction the breach of the contract before it is fulfilled, employers are the only ones left to claim for damage in every single case.

I personally consider such behavior as inacceptable and very unprofessional, especially on a managerial level, since hiring and HR managers, as well as agencies and consultants will make their notes in the database and they will never hire or recommend such a candidate. It is also a phenomenon of the young economies on the other side a cultural issue. In more southern countries or the Islamic world the behavior codex plays a larger role so no candidate would sign a working contract and not show up for work later as a document with my signature on it still has to do with honor and personal reputation.

Written by Joerg Keplinger, CEO, Williams & Partner CEE

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