Lost opportunity cost

There are four ways of spending money on recruitment.

• First is the visible outlay – the fee.

• Second, the invisibles – how many interviews do you do per hire? How much does your time cost?

• Third, the replacement cost – all of the above, all over again.

• But the most costly (and least visible) is the lost opportunity cost.

If you pick your employees from people who fit the job without anything more to offer, you’ll end up with an average company.

But by selecting people who can bring that extra dynamic with them, that gives you an edge. In a competitive environment do you want an average company, or a team with the potential to win?

That fundamental difference in value is what we call lost opportunity cost. It’s hard to quantify, but it is one of the ways good companies become great.