How to successfully hire a software developer? Beware of mistakes that will cost you a mint!

Imagine you are recruiting. You open a CV that grabs your attention from the first sentence. At the interview, the candidate goes way above your expectations. They surprise you with their brilliance while solving technical tasks. They are like a breath of fresh air to your company. You close your eyes and feel a firm handshake as the stamp of approval. And then you open your eyes and find the vacancy still yawns because the candidate has moved on to the competition.

Are you familiar with this scenario? To comfort you, I'll tell you that most hiring managers have experienced similar situations. When a relationship is established, as many as 22% of new hires leave their position up to 45 days after signing the contract. If we extend the perspective to 90 days, the percentage of departures increases to 33%.

Is it possible to avoid costly missteps in IT recruitment? How can you prevent your company from losing thousands of dollars in the hiring process? Check out the practical and proven IT recruitment best practices at Happy Team, and discover that hiring can be a positive and rewarding experience!

How much does it cost to employ a software developer?

Hiring a new employee is an investment in your company. Like any purchase or consulting service, the IT recruitment process should carry long-term benefits. However, it’s important to recognise that the most profitable investments require significant upfront costs. If you don't shift your mindset to view recruitment as a valuable investment, the uninvested funds will leave you with painful losses in the long run.

How costly is a failed software developer recruitment? According to the US Department of Labor, the total cost of a failed recruitment averages 30% of the salary earned in the first year of employment. But the IT industry is upping the stakes. As Forbes reports, the cost of losing a junior is hovering around 50% of their salary, a mid 125%, and a senior executive leaving costs up to 200% of their annual salary. Turning the percentages into real rates, the financial losses associated with IT recruitment mistakes range from $165,000 to even $240,000.

The above values are approximate costs, which may vary depending on:

• specialisation,
• position,
• salary level,
• seniority,
• employment country.

For example, in 2019, an unsuccessful recruitment of an employee in Poland cost approximately $23,000. Even though the pandemic and high inflation certainly increased the loss, this is still ten times less than the total of IT specialist employment in the US.

All components of a bad hire cost

Why are mistakes in hiring the best IT talent so damaging? The recruitment process requires involving a lot of people. Besides the valuable time of specialists, there are also costs associated with preparing the position and onboarding the new employee.

What costs do employers bear because of an unsuccessful recruitment process?

• The value of the employee's salary multiplied by the period worked in the role.
• Overtime costs of employees replacing an absent person.
• Administrative costs (taxes, social security).
• Expenses spent on recruiting the outgoing employee.
• Training and deployment costs (including the other team members' time training the new employee).
• Expenses for hardware and software licences.
• Costs of job-board adverts and paid publications on social media.
• Cost of ATS tools used by the HR department to monitor recruitment processes.

A lot, huh? What if I told you it's not all? To make the ad attractive and ensure that the new employee is a perfect match, the HR department, along with marketing, design, technical specialists and business representatives, does a titanic job. The number of tasks to perform and decisions to make is gigantic, and every element adds to the overall costs.

What are the costs of the IT recruitment process? Calculations

The hiring of a new person is the result of the cooperation of many people who set aside other responsibilities to refine requirements, prepare an ad and check dozens of technical tasks. Before the head of the department shakes hands with the new person and says: ‘Welcome on board!’, graphic designers, copywriters, marketers, managers and specialists in specific technologies step in. Wondering how much money and effort it takes to recruit a new software developer? In our calculations, we've tried to include every task linked to the IT recruitment process. The amounts of the tasks and timing are approximate, so in your case, the total cost of unsuccessful recruitment may differ from our calculations.

Initial assumptions:

The recruiter arranged a screening with 10 people, five of whom qualified for the technical interview stage. The selected person signed a B2B contract. They worked using the provided equipment, and received all the necessary benefits and tools for coding. Unfortunately, the newly hired software developer left after 3 months with the company. The recruitment process will be restarted to find a replacement for this position.

The recruitment process involved:

The activities performed to hire an employee are:

The $33,375 is not the final amount. That's just the cost of sourcing and hiring a mismatched employee for 3 months. To this sum, you'd add the cost of advertising and recruiting again, an extra $6,675. So, by the time the new person is hired, your company will have spent almost $40,000. And how do you know the next person will work more than 90 days?

Furthermore, the above table includes only costs you can measure with the available tools. But what about the possible losses in productivity and your company's public image? Let's look at moral costs, which are just as painful as recruitment expenses.

* The new employee productivity in the first month is 25%. To maintain stable operational efficiency, the remaining 75% of productivity must be achieved by the other team members.

Money isn’t everything. The intangible losses of failed IT recruitment

Sometimes financial expenses are nothing compared to the damage that high staff turnover can do to your business. Frequent personnel changes can cause anxiety among regular employees and lead them to consider offers from competing employers. Also, potential candidates may feel insecure applying to your company when several of their predecessors have left quickly. What problems can the wrong approach to IT recruitment cause?

Decreased productivity and staff morale

Have you ever been in a situation where a new teammate just vanished? Or maybe you resigned fresh after being hired because the reality was drastically different from your expectations or the employer's promises? Usually, no one thinks if the new person is qualified for his or her position. The subject of office gossip becomes the company's potential difficulties, not the candidate's skills.

Unsuccessful recruitment, which results in the departure of an employee, disrupts team dynamics. Research shows that due to failed hiring, the morale of long-serving employees drops by around 32%. Employees with lower morale are less motivated, which results in lower productivity. C-level professionals are also complaining about reduced effectiveness. In a survey conducted on CFOs, 34% admitted that they must spend 1,5 of 8 hours supervising underperforming employees.

Increased stress level

The departure of a newly recruited employee disrupts the work rhythm and generates more stress. An especially nerve-wracking situation may be the feedback or termination interview. When one of the team members leaves, the manager and the other employees must adapt rapidly to the new situation and minimise the damaging effects of the failed recruitment. Working after hours disrupts the work-life balance because staff members need to cancel their favourite activities or postpone their holiday plans.

Weakened brand image on the job market

Are you looking for reviews of a company before you choose its services? Job seekers do the same before applying to a potential employer. What happens if they find comments from people who want to share their sourness with your company online? They will probably give up the recruitment, and you will lose more weeks searching for the right person to join your team. While the blame for unsuccessful recruitment doesn't have to be entirely on your company, potential candidates won't be verifying opinions. It is up to you to select people who are comfortable with the corporate atmosphere and are sufficiently motivated to perform their duties.

Missed business opportunities

What if employee turnover in your company was close to zero? How many more clients could you attract if you didn't have to focus on hiring? Research shows that bad hires lead to losing 10% of business opportunities. What does this figure mean for your business? What goals could you achieve if you increased your clientele by 10%? On the other hand, how many clients would have stayed with your company if you had avoided mistakes in IT recruitment? In projects requiring maximum commitment, even one annoying situation related to hiring the wrong person can end the cooperation. That's also a message to potential partners that your company may not meet their expectations.

Where do errors in hiring IT talents come from?

The above paragraph leaves no doubt that recruitment impacts your company's success. An improperly conducted hiring process can generate serious consequences damaging the stability and profitability.

Unfortunately, the fish rots from the head. A failed IT recruitment process is often the result of incorrectly defined requirements and excessive haste. When you add inaccurate sourcing and insufficient testing of a candidate's technical qualifications, hiring the wrong person is in the bag.

But applicants are not blameless. Many people send resumes en masse without checking if they have the right technical skills for a particular position. Others write tales about technologies they have never actually worked in. As a result, 45% of recruiters report they have encountered a situation where a candidate has provided false information about their qualifications. What else causes failures during the IT recruitment process?

Lack of technical knowledge

Do HR professionals know the difference between Java and JavaScript? A basic understanding of the technologies used in a company is crucial to reviewing candidate applications. In an interview with CareerBuilder, a staggering 22% of respondents said they lacked the knowledge and skills necessary to effectively conduct recruitment interviews.

Not involving software specialists

Did you know some companies don't involve software specialists during the IT recruitment process? Software professionals are not only priceless in verifying a candidate's technical abilities but also their personality traits. They will be working directly with the new person and hiring someone who is not a good fit for the team could result in its rapid collapse.

Inadequate job descriptions

Benefits are vital, but a precise job description gives you the biggest chance of finding top IT talent. HR and the business representatives should develop a maximally accurate job description that reflects the employee's role within the company and meets business objectives.

The Glassdoor survey showed that up to 61% of employees noted their jobs didn't match the descriptions. These figures mean that, on average, 6 out of 10 people may sooner or later decide to change jobs.

Poor timing

All recruiters want to fill vacancies in the shortest possible time. The sooner they do this, the faster they relieve the burden on existing employees and minimise the risk of further departures. Very often, the driving force behind recruitment is the need to find someone with expertise in a new technology that could give the company a business advantage.

Haste encourages wrong decisions. A recruitment process that takes too long is also not welcome. A 2016 study showed that 56% of recruiters picked the length of the recruitment process as a reason for failure. Delayed decision-making can frustrate the best candidates, who will choose another company.

Conventional thinking

Social media allows you to find candidates who don't send their applications to companies. Typing in a few keywords opens access to the most talented programmers. Still, not every software specialist knows self-presentation, so it is up to recruiters to find non-trivial ways to reach the most attractive candidates.

Relying strictly on figures

One of the underrated IT recruitment mistakes is turning off your intuition. If you have a candidate with impeccable qualifications, but your sixth sense raises a red flag, trust it. We are only human. Once hired, you may find that your new employee struggles to find in your company's specific culture. Picking up on such nuances at the recruitment stage will save you from wasting tens of thousands of dollars on an unsuccessful recruitment.

Lack of deployment monitoring

In theory, onboarding completes the recruitment process. In practice, not always. When a new programmer gets their first tasks, and the quality of their work falls short of expectations, you need to investigate what is behind the reduced productivity. Are you sure all training sessions have taken place? Does the cooperation style in your company match the predispositions of the newly hired IT specialist?

Not monitoring employee motivation delays the identification of mismatches among crew members. Ultimately, your company could lose money, time and reputation by hiring someone who would be far more successful with a different team.

How did Happy Team identify and eliminate costly IT recruitment errors?

Our job is to hire. Before we found the middle ground for matching ideal candidates with employers, we had also made the most common mistakes in the IT recruitment process. But each failure was a valuable lesson, so now we know recruitment nuances like no other. How did we master the hiring process to find the most talented software specialists?

Step 1: Identifying the business goals

What seems clear at first glance is not always so after an analysis. Before we put ads on job boards and log into LinkedIn, we get to know the business objective of the recruitment. Next, we meticulously prepare a job description and select the communication channels we will reach the candidates. LinkedIn can work best for reaching certain audiences, while others will be easier to find on TikTok.

Step 2: Verifying the tech skills

Happy Team is well-versed in technology. We can sense from a distance whether a potential candidate has experience working with the required languages or whether they're presenting us with knowledge acquired minutes before they walk into an interview.

From our technology-oriented HR specialists to our CTO, who knows no less about .NET than its creators, we can effectively weed out the least suitable people at every stage of the recruitment process.

Step 3: Checking the chemistry with the candidate

A can-do attitude or a red flag? At this stage, we listen to our sixth sense and check the candidate's soft skills. We also verify the English language level because Happy Team works mainly with foreign clients. No language barrier helps the developers understand the client's requirements and deliver software solutions that accurately reflect their expectations.

Step 4: Streamlining the onboarding process

Effective onboarding processes increase the chances of new employees retaining the company by 82% while increasing productivity by 70%. That's why, at Happy Team, we make sure that candidates feel comfortable interacting with us. We maintain a well-balanced pace of the hiring process and provide regular updates. We are in touch with each candidate and want to leave behind pleasant memories, even if we don't start a cooperation.

Would you like to find out how we perform the staff augmentation process? Watch the video below:

Nevertheless, even with the best procedures, we are human and make mistakes. What do we do in these situations? As soon as we catch a problem (and we do this quickly), we investigate its origin. Then, we prepare a recovery plan and monitor its effectiveness. If there is nothing else we can do, we quickly organise another specialist for our client to minimise the negative effects of unsuccessful recruitment.

Final thoughts

A well-conducted IT recruitment process will help your company succeed while hiring the wrong person can plunge your business into debt. If you're tired of searching for new employees or of mistakes made by your HR department, speak to Happy Team. We are a software house that successfully matches candidates with clients. Our competence is confirmed by dozens of successful hires and the numbers generated by clients who augmented their software teams with us.

Curious to know more? Read the case studies of the StoreFeeder and Business Science Corporation projects.

Looking to work with us? Feel free to contact us!