It isn’t easy being an employer. Often over-stretched and under-resourced, HR practitioners are increasingly faced with the dual challenge of finding the best talent for their organisations and maintaining a consistent employer branding while keeping their recruitment costs to a minimum. No easy task. So how can organisations reduce their recruiting costs without sacrificing quality?
Despite the implementation of widespread streamlining measures, recruitment costs in the UK remain one of the highest in Europe and the reasons for this are numerous:
1) The growing proliferation of media available
2) Scattering of talent across a multitude of internet destinations
3) Continued dependence on recruitment agencies to procure the best talent
Indeed, it is perhaps the latter point which continues to prove the greatest expense for many employers. In the UK, the average fee recruitment agencies charge their clients for each successful placement is 16% of the salary being offered. Which, based on a Contractor rate of £300 per day, means that recruitment agencies stand to make as much as £960 in commission each month or over £11,500 per annum.
Take the following scenario: If you are an organisation which relies on Contractors to manage existing and anticipated workloads on a regular basis, you will could hire up to 5 contractors during the course of a given 12 months. The costs of filling these places using a recruitment agency could see your recruitment costs escalate to £4800 per month, or almost £58,000 each year.
Of course, it is possible to negotiate a lower commission rate with the recruitment agency, but while this may positively affect your recruitment costs in theory it will in fact have a detrimental impact on your bottom line. In reality, money talks and most agencies will simply channel their best candidates to where they will earn the highest fees – enabling those employers to cherry-pick the best talent available and leaving you with the best of the rest. This will invariably prove more costly in the long-term, with the cost of poor hiring decisions costing UK Plc some £40bn each year. So what can you do?
Reduce the time to hire
A recent survey found that 4 out of 5 candidates lose interest in a job if the recruitment process takes longer than anticipated. Aim to keep the process to a maximum of one month – the best talent will not hang around for long and if you don’t act quickly your competition probably will.
Create the right job description
Give candidates the opportunity to ‘sell’ themselves to you by providing them with enough information about the requirements and expectations of the role. Too little information and poorly written job specs will result in poor quality applications and increased recruitment costs.
Effective employee referral schemes
These can be higher effective in keeping your costs to a minimum while attracting a suitable volume of applications. However, a word of caution – if the value of the referral fee is too high you will be inundated with a mass of inappropriate applications with employees encouraging lots of their contacts to apply, while keeping the fee to low will have the opposite effect with few CV’s received which will add to your costs.
Candidates are expected to prepare thoroughly for interviews and they rightly expect their interviewers to do likewise. Yet poorly prepared interviewers are commonplace. Ensure all hiring managers are properly trained in effective interview technique – the better the ‘candidate experience’ the better your chances of securing the best talent for your business.
Implement a direct recruitment model
By far the most effective way employers can reduce their recruitment overheads is by implementing a direct recruitment model – or put another way, a direct candidate attraction process. In an era of economic uncertainty this is fast-becoming the preferred recruitment option for employers, with systems such as that offered by Elevate already saving organisations £000s each year.
For example, the average cost per hire using Elevate’s direct recruitment platform is just 4% which equates to as little as £240 per month (less than £2,900 a year) – £720 per month less than with a recruitment agency. When we compare these costs over a typical twelve month period, an employer hiring up to 5 Contractors over the course of a year using Elevate’s direct recruitment model could save as much as £44,000.
Adding those kinds of saving to the bottom line is a good news story that you should all want to deliver…..