The top five ways to reduce the cost of recruitment
Since the release of our blog 'The True Cost of Recruitment', we have discovered that this has been a frequent talking point, not only with potential clients but with other members of the recruitment and HR communities online. Therefore, we decided to summarise in a 'Top 5' (its so 'on-trend'!), the Top Five Ways to Reduce the Cost of Recruitment. Read it, it could save you some money!
Cut back on agencies:
They cost 20% of salary on average, and in some cases much more, but in terms of delivery, many do little more than check online databases and run ads that companies can do in-house. For the vast majority of recruitment, an outsourced or in-house team can do the same job for around half the cost.
Only use agencies where they add value, where they offer real expertise and access, or where you really have an emergency. They should generally be a last resort, not the default.
Getting CVs from agencies and advertising is costly and very hit and miss. Worse still you’re usually only accessing the 2-5% of candidates who are actively looking for a new job, and there may be a good reason why they’re in need of a new employer…
Instead, focus on building your EVP and employer brand so candidates come to you. In the meantime network and use focussed adverts to gather information to build a Talent Warehouse of potential candidates. Don’t forget to use internal referrals too, a personal recommendation is a powerful tool for attracting talent and it’s very low cost.
This way you not only cut the cost of sourcing, you increase the quality of candidates available to you, which in turn reduces time to reach optimum productivity and increases productive performance, adding directly to bottom line.
Reduce the workload on management:
The cost of a manager (HR or Line) doing recruitment rather than their day job is very high. If they have to draw up job specs, brief agencies, write adverts, screen dozens of CVs, conduct multiple interviews and potentially go through the process two or three times, the cost is going to mount fast. The problem is made worse because recruitment is not a Line Manager’s day job, so they are almost never as efficient as a professional recruiter. Some will end up screening or even interviewing dozens or even hundreds of candidates, and conducting long, poorly developed interview processes. As a result, the average line manager led hire takes around seventy hours of in-house management time, that’s almost ten working days per head!
Give the problem to the professionals and only take management time when it’s necessary; for initial briefing, for agreeing the shortlist and for a focussed interview process of pre-qualified candidates. An effective solution can cut management time spent by 70%.
Streamline the process:
A poor process costs everyone involved in recruitment time, and therefore, money. In some cases, up to 98% of candidates going to apply, drop out before they reach the end, just due to a poor application process. Make sure the process is professional, slick and takes the minimum of effort for everyone concerned. It saves time, money and gets you more and better people.
Shorten time to hire:
The biggest single line item on the cost of recruitment is the money lost by not having someone in the business doing the job. The faster you can get someone on board and up to speed the more money you can make. Do this by ensuring that the job spec is precise, by being rigorous in selecting candidates and decisive in interviewing, but most of all, have a pool of candidates ready for roles you know you’re likely to need. On average 80% of hiring is predictable up to 12 months in advance. Develop talent pools and a Talent Warehouse to slash hiring times by 70%.