Hi! I’m on my way to share with you one of the most hands-on topics – cost saving in Recruitment. Indeed, not rocket science for our data-driven world but still an important topic to highlight and talk about, basically because time is money, and Recruitment involves tens of processes and stages which are sometimes way too challenging to track and measure.
One more thing, filling the role is not the final check mark – no employer wants to spend time & other resources on hiring someone who’s going to “check what’s going on in the company” for a few days and then leave, or on employing someone who lacks experience and doesn’t know how to handle the job and day-to-day responsibilities.
To address these concerns, recruitment agencies like O2 Employment Services streamline the process by carefully evaluating candidates for both their skills and cultural fit, ensuring that the selected candidate not only matches the job description but also aligns with the company’s long-term goals and values.
Additionally, to avoid potential issues when hiring staff, it is important to conduct a thorough background check on the candidate and consider their years of experience. It can also be beneficial to seek assistance from a recruitment agency that specializes in Executive Search Florida and other locations, particularly for major positions such as senior manager, CEO, or CFO.
Recruitment agencies can provide valuable insights and resources, ensuring that the selected candidates not only possess the necessary qualifications but also align with the company’s culture and values. Furthermore, these agencies are usually well-versed in HR vocabulary and definitions, which can help streamline the hiring process and ensures that all legal and professional standards are met. By leveraging their expertise, companies can make more informed hiring decisions and mitigate risks associated with onboarding new employees.
Now, when I’ve managed to tell you “Why” is this important, let’s switch to the “How” part. Here’re several hands-on tips on how to save money, time & other important resources in Hiring and Recruitment.
1. Calculate Your “Cost Per hire”
Chances are high you may get disappointed when digging deeper into your hiring data and trying to analyze its efficiency. There’s a huge list of Recruitment metrics (and we better use as many of them as possible), however, the Cost of hire is the bare minimum we can calculate.
In collaboration with the American National Standards Institute (ANSI), SHRM confirmed a standard formula for calculating the cost per hire:
Despite the fact that this statistic is well-known, calculating it is frequently challenging. Data accuracy suffers when recruiters are forced to track expenses retrospectively since they frequently forget to do so. I usually advise keeping frequent records of all the finance you spend on recruiting starting on the first day.
Let’s break down the formula and go through each part.
Internal recruiting costs
Internal costs include salaries paid to internal employees, money used for all organizational expenses, and much more. These costs could consist of, but are not limited to:
- Salary costs of the time spent on the recruiting process by hiring managers
- Salary costs of the entire HR department who participated in the recruiting processes
- Referral bonuses
- The amount of money spent on job boards and announcements channels
- The amount spent on marketing activities such as post boosting, advertisements, and so on.
External recruiting costs
External costs refer to the internal staff, finance spent on all organizational stuff, and much more. These expenses may include, but are not limited to, the following:
- Job Boards and Announcements Channels: This refers to the expenditure on posting job openings on various job boards and channels to attract potential candidates.
- Marketing Activities: This includes the costs associated with marketing efforts aimed at promoting job vacancies, such as post boosting on social media platforms, running job advertisements, and other promotional campaigns.
- Recruitment Agency Fees: This entails the expenses involved to find Flat Fee Recruiters (or other types of recruitment agencies) and hiring them so that they can assist with the recruitment process.
- Applicant Tracking System (ATS): The ATS is a software used to manage and track job applicants throughout the recruitment process. The monthly subscription or licensing fees for the ATS are considered part of the recruitment expenses.
- English Checking Costs: This comprises the expenses related to checking the language proficiency of candidates, either through the utilization of software or by employing English-checking services.
2. Referrals
My own experience, and the experience of my colleagues and fellow recruiters show that hiring through referrals is cheaper, faster, more productive, and may help minimize turnover. It’s like having a whole squad of headhunters when you have a successful referral program. Employees begin to seek the best talent for the company and are rewarded for their efforts. Let’s concentrate on the 3 main aspects to move forward with referrals.
A referred candidate is cheaper to hire than the traditional one – You won’t have to pay typical recruitment charges to find them; such as a job posting on a job board or agency fees, and because they’re faster to hire, you’ll save money on your internal team expenditures as well.
Even after paying them the referral bonus, which can range from $500 to $2,000, the savings can be significant. For example, if a recruiting agency charges 15% of a recruit’s first-year salary, a $70,000 hire could cost $10,500 in fees. Even if you give your employee a $2,000 referral incentive for successfully recommending a candidate you’ll save $8,500 compared to recruiting through an agency.
In comparison to a traditional candidate, a referral candidate is faster to hire – We can cut out several stages of the usual hiring procedure here. For example, gathering CVs and screening them, posting job openings through various channels, and so on. Long story short, we eliminated 80% of the administrative work and focused solely on the key recruitment phases, such as interviews (HR, professional, team), tasks, offer, and so on.
A referred hire will be onboarded more quickly than a traditional hire – This is the most lovely part of mine. As our employees know the company’s culture, they have an internal look and know the real job that needs to be done. They refer candidates who are culturally compatible with the company and possess the necessary abilities for the role.
As a result, the referred employee already has a “buddy” in the company with whom they will be able to onboard much more quickly and easily.
3. Show flexibility
I’m not a fan of the hypeish word “flexibility,” but what the heck, it’s working guys!
What I mean by saying showing flexibility:
- Conduct online interviews – it will save a lot of time. Relating to the previous statement, saving time is equivalent to saving money.
- Don’t hold up the recruiting processes no matter what – It costs more days to hire a professional when the procedure is delayed. Again, time is money.
- Meet during off hours/days – sometimes we need to go the additional mile to get the outcomes we want, which is quick hiring with high quality. We lower costs when we cut back on hiring days. The shorter the recruitment process, the more money is saved. I’m not advocating that recruiters work on their weekends, but when we need to get good results quickly while conserving money, this is the route to go.
Let’s be more productive, faster, and professional because we’re dealing with our companies’ money & time. The most important aspects that one can possess!
Ashkhen from Magnus
