Every business needs to recruit employees. Employees are the ones that make a business thrive and determine how successful it will be in the future. Our very own CEO Ben Thompson in a recent webinar we hosted on business compliance stated,
‘We always say that people are the foundation of businesses; if you can get your people to perform at the top of their game, the results are outstanding.’
But in order to bring in the best and the brightest talent to your business, it comes at a price. Today, we want to look at the hidden recruitment costs you might not know about, and discuss the more cost-effective ways to hire new employees into your business.
We’re here to make sure you do right by your business the next time you need to hire top talent. To start off, let’s look at all the hidden recruitment costs you need to bring into the equation.
Hidden recruitment costs?
There are a number of factors that go into the recruitment process, on top of planning and onboarding a new employee. As a hiring manager, your company or department may require you to outline various costs associated with this task, so we’re going to break the costs down for you.
#1 The monetary cost
The actual monetary cost of recruitment comes first. This includes;
- Salary of your recruitment team
- Salaries of extra team members involved in the hiring process
- Internal commissions or referral bonuses you might have set up
- Advertising and online job board costs
- Investment of software that you use to hire employees
These are some of the biggest costs of recruitment and arguably are the easiest ones to identify and price up. When you add everything up, the average cost of a new hire can be anywhere between $3,500 to $5000.
#2 Time invested by staff during the hiring phase
In business, time is valuable. Whilst you may already have allocated a certain financial cost to recruitment including the items we listed above, it is easy to underestimate the time it takes to hire a new recruit.
- Writing, creating and posting to and promoting the job ad to networks will take a lot of time out of your hiring managers day-to-day tasks.
- During the time you are hiring, there is either no productivity in the role you are hiring for, or limited productivity. If the hiring process takes longer than usual, this extends the lost productivity time and output for your company.
- Time taken out for filtering through applicants may take a considerable amount of time.
- When you do finally reach the decision to hire someone, the negotiation stage can draw out the process longer, leading to more HR wages allocated to the hire, and productivity and output lost in the role you are hiring for.
These elements of the recruitment stage, although they don’t come with a physical price tag, still add up in time lost for current employees.
#3 The recruitment cost of “bad” hires
A new hire who doesn’t quite “fit” can be costly to your business – this could be someone that just doesn’t work out in the role and either leaves the company on their own, or is asked to leave by the business.
This will not only mean having to start the hiring process again, but it can also lead to less productivity amongst remaining staff, lower employee morale and it puts existing projects on hold. The recruitment cost associated with this can be profound for your business!
To make sure you don’t have to deal with this particular hidden cost of recruitment, here’s a handy guide on how to make sure you hire the right person for an upcoming role.
#4 Outsourcing costs
This one won’t apply to everyone, but many companies are looking to outsource the hiring process to recruitment agencies to avoid all of the above costs associated with hiring the wrong person.
Recruitment agencies have an advantage over in-house recruitment as they tend to have bigger and better industry networks, contacts, databases, and manpower invested in recruitment.
Whether or not you choose to recruit in-house or through an agency, be sure to factor in the extra time, energy and effort outside of the financial recruitment cost.
The most cost-effective recruitment strategies
Now, every business wants to save money. And as you can see, with the mixture of monetary and timely recruitment costs it can add up to a hefty bill. So we want to run you through some of the more cost-effective recruitment strategies that can save you a few dollars (and minutes) when you next need to hire.
A cost-effective recruitment strategy is leveraging your current workforce to refer hot candidates. This can be through their friends, families, former colleagues or just their growing networks. The benefit of this strategy is that your employees would have already done half the sense checking for you! And it’ll cost a lot less than using an agency or outsourced strategy.
In order to really engage your employees into the referral scheme, we suggest setting up some sort of incentive. That means if their referral is successful they will receive some sort of reward. This can be monetary, time-dependant, whatever works for your business and your budget.
Another tip that goes hand in hand with recruitment referrals is turning your current employees into brand ambassadors.
Jobseekers are no different from the average consumer of a product. In the same way as they would when buying a new pair of shoes, they will do their research on a business before applying for a job. They might ask colleagues, peers and friends for their impression of a business, consult their LinkedIn connections or read reviews on Glassdoor for insider knowledge.
Therefore employee advocacy has the potential to be a very powerful yet inexpensive recruitment tool for your business.
Social media is a cost-effective recruitment strategy for an obvious reason; it’s free to post. Create a cool, attractive graphic that will get people to stop dead in their newsfeed and read all about your exciting new role.
You can again focus on the power of your existing workforce and get them to like, comment and share to post to their networks. This way you’ll reach even more people (again for free!)
When it comes to social media posting, remember;
- Video content is very important, they’re more effective in grabbing people’s attention in the newsfeed and favour the algorithms much more. Perhaps you could film the department head explaining the available roles within their team? Or get one of your current employees to shoot a fun testimonial video about why they love working for the business. The more creative the better.
- Don’t be afraid to use mages! Graphics are important for social media posts, so ensure images are incorporated into your social media recruiting strategy.
- The power of hashtags is real!
Job Fairs and Industry Conferences
Job fairs are a low-cost way to find employees. Whether you decide to attend a live or virtual job fair, you don’t necessarily have to invest in a large, expensive stand. You could just attend and simply network with other visitors on the day. Bring some hot off the press business cards and your networking expertise, and that’s all you’ll need.
Similarly, attending industry conferences and trade shows that aren’t centred around recruiting is a great cost-effective recruitment strategy. You can talk to potential employees through networking at these events. As well as meet with others who work in a related industry that may give you the ability to tap into potential candidates.
If you don’t have the right tools at your disposal for your recruitment needs, your ability to hire cost-effectively will be hampered from the start. Although it might seem like a big up-front cost, if you invest in a robust applicant tracking system (ATS) – such as Workable – you will be able to streamline your process, reduce duplication of work and data entry, protect candidate data and better comply with the requirements of the GDPR. It’s a win-win-win-win scenario!
Create job ads that speak for themselves
The job advert that potential candidates see, whether that’s on your website, a job board, or on social media, will be one of the first experiences they have of your business. So it’s vital that you create an on-brand, appealing and engaging job ad. One that really stands out from the crowd.
Your job ad not only has to be well written, but it also needs to be compelling, optimised for search, and clearly outlines the job’s key requirements and responsibilities. With the help of our amazing friends at SEEK, we’ve created a great guide on how to create the perfect job ad. With the right job ad, you can invest minimal amounts of time and money into promotion.
Reduce the need to recruit
The final cost-effective recruitment strategy we want to highlight might sound a little strange. But one way to really cut costs is to simply reduce the need to recruit in the first place!
This can be done by improving the way you support and engage your existing employees. Supporting them with internal training, upskilling opportunities, as well as incentives, will overall improve your company culture and employee engagement levels. This, in turn, lowers your staff turnover and therefore reduces the need to recruit in the first place!
The Wrap Up
As you can see, there’s a lot more hidden recruitment costs than first meets the eye! But with a few cost-effective strategies in place you can save your business time and money and still recruit top talent.
If you want more information about recruitment and how you can use your awesome employer brand to attract top talent – take a look at our webinar here.
Employer Brand: The Secret to Attracting and Retaining Top Talent