- Louisa Plint
Recruit well and you will save money on your recruitment processes - here’s how
As the number of job vacancies in the UK continues to grow, currently sitting above 1.1 million, companies face an ever-evolving list of challenges when it comes to finding, attracting and retaining the best talent. The result of Covid across a number of sectors is that companies have delayed their hiring in times of uncertainty, and they now face growing demands on time and money to catch up.
Recruitment can be a strenuous task at the best of times, but even more so when the opportunities available to top candidates are plentiful. As a result, choosing the best path for your recruiting needs has become even more of a priority, and cost efficiency is key. How much does recruitment cost your business each year? If you recruit well, you can expect to save money.
So what does it cost?
There are a wide range of costs associated with hiring, some of which are transparent and obvious, and some that are more subtle. Here are some of the factors that affect the cost of recruitment:
Job adverts (£50-£500)
Social media posts (Time and resource)
Recruitment agencies (15-30% of annual salary)
Review CVs (Time)
Company marketing (Time/1% of Revenue)
Delayed recruitment (Time)
Employer costs (30% of annual salary)
Onboarding and training (£2,000-£5,000)
When it goes wrong… (Immeasurable)
So how do you recruit efficiently AND effectively?
There are two main avenues open to companies looking to hire, and there are benefits and drawbacks to both.
Recruiting through an Agency
Agencies don’t have the best reputation at the best of times, but there is a reason the industry is worth over £48bn a year, and that is because a large chunk of them know what they’re doing. They are tapped into the market 24/7 and understand what’s out there, and the good ones can quickly garner a deep understanding of your business and find you the right match. However, there is a cost associated with such expertise.
So what are the benefits of using recruiters?
They have a large network of candidates and they understand how the market moves so they can seek out the best candidates for you quickly.
The relationship can be flexible and non-exclusive meaning you can change tack if you’re not happy with their work.
A good agency will aim to understand your company intimately and therefore be able to accommodate culture fit, team fit as well as the basics of qualifications and experience.
They’ll save you a lot of time (see list above). Your time is valuable and recruitment agencies can significantly reduce the amount of time you or your team spend with seemingly menial tasks such as sifting through CVs, screening with preliminary interviews and managing the recruitment process with strong communication. After all, they should operate as an extension of your employer brand although see below for the flip side.
It can’t all be positive…
Recruitment agencies appear expensive. The average agency charges between 18-30% for their services, and that can feel like a large investment up front.
Some agencies will focus on delivering quantity over quality and that will lead to frustration - who needs a mountain of CVs, when the agency is supposed to be narrowing the field to find those talented individuals.
Recruiting through an agency means your company is not front and centre in the hiring process and it can reduce your brand representation if the agency doesn’t represent you effectively.
It is important to note that, if a recruiter is doing a good job, it should feel expensive. You’re wondering why? A good recruiter will deliver a small selection of excellent candidates quickly and efficiently. If they do their job well, you will have your new starter in a matter of weeks and it’ll feel like you’ve paid for very little work, but that efficiency and accuracy is what you’re paying for. The connections and excellent communication skills, alongside the clear understanding and representation of your brand. When you add up the cost of time you’ve saved, the revenue generation enabled by your new employee and opportunity to focus on growth, good recruiters are more than worth it. Invest in the additional support and it will more than pay for itself with the right talent and culture fit that will support your business to grow and will impact the bottom line.
In-house recruitment appears from the outset as the cheaper option, often requiring little or no direct cash investment, but even if it doesn’t appear on your cash flow, it doesn’t mean it isn’t costing you anything.
Here are some of the pros of in-house recruitment:
You know your business and therefore, you know what you’re looking for. In a perfect world this will reduce your swing and miss rate when it comes to the recruitment process.
You can leverage and therefore grow your brand to incentivise potential employees in the future.
You have more control over the recruitment process ensuring you have an in-depth understanding of the candidate pool, enabling you to make the best selection.
But there is a tradeoff…
Gaining brand recognition in a busy jobs market can be challenging and can reduce the access to well-qualified candidates. If you haven’t identified a talent pipeline or created a pool of potential candidates, it can cost £50-500 to advertise a job effectively, a cost that is swallowed by any agency that you engage.
Your time commitment will be significant. If you’re successful in advertising your job, you could be left with hundreds of CVs to vet without the technological infrastructure to efficiently process them. And then there is a wide ranging quality in CVs that are sent alongside covering letters. In addition, you need to factor the cost of your team focusing on recruitment instead of the business itself. You may end up needing to carry out more interviews as the initial screening process hasn’t identified quite the right candidates. Interviews take time and time costs money.
Inefficient processes can affect the quality of the candidates. If it takes you too much time to recruit, you will lose out on the best candidates, especially in a competitive market. If the job is rushed, excellent candidates may be overlooked and then there is the question of how you control bias in the recruitment process.
So although at first glance it may appear that the route to cost efficiency is clear, there are many factors that impact the true cost of the recruitment process, all of which should be considered before jumping in one way or the other.
Other costs to consider
Assuming everything goes smoothly with the actual recruitment process, it is important to also be aware of the other costs companies face when hiring.
Onboarding and Training
Having found yourself the perfect candidate and agreed employment, there will need to be an onboarding and training process. In order for the new employee to work effectively, they’ll need to understand what they’re responsible for, and that will take time. This won’t just be the time of the employee themselves but also that of whoever is administering the training. Make sure to factor in what that intangibly costs you.
Office supplies and equipment
Before you hire make sure that you have considered the technological costs of the hire. Does the company need to purchase a computer for this new starter, or any other equipment? With computers costing anywhere from £800-2500, it is a significant cost that shouldn’t be ignored.
The list of responsibilities of an employer is long and ever evolving, and stretches far beyond just the salary. There are many benefits a company can offer an employee, and there will all need to be paid for. In addition, the operational costs of employing someone include 13.7% national insurance, 12.7% holiday pay, and at least 3% employer pension contribution.
The cost of a bad hire…
The last cost that often gets forgotten is when things don’t work out. A bad hire can affect your business in a range of ways. Whether it’s a loss of productivity, wasted time, loss of sales, negative morale or reputational damage, there is a cost to getting it wrong. It can be significant if you have already paid for the recruitment of that candidate. If you haven’t set a probationary period, you may find that it takes time to remove that employee. All in all it can be a nightmare situation that no one wants to find themselves in.
Looking to save money on your recruitment?
Auxeris does recruitment differently - the current agency model is broken and we’re here to fix it. We’re giving a better cost rate to clients, who still want experience an excellent recruitment service by delivering excellent service with a 15% fee on permanent hires. Our network of experienced recruiters are talented at identifying excellent candidates. We’re also an ethical recruiter, who doesn’t send speculative CVs and only speaks to candidates about actual jobs that we are hiring for. So you can be confident that as we act with integrity, we have the connections to identify top talent that can take your business to the next level. Interested to know more? Let’s connect!