A company’s performance is only as good as its people. For a business to thrive, they need to find A-players to build a high-performing team. To bring in the top players in the game, companies need to invest in their recruitment process.
So, how much does recruitment cost?
To answer this question, there are several different recruitment practices that you need to look into. The recruitment process is multi-faceted, several hidden factors go into it.
Costs in Recruitment
Expenses don’t just start and end with the hiring and onboarding process. Companies also need to take into account other factors like the costs of a good or bad hire. Or the time they have lost during the recruitment process. To help better understand the true costs of recruitment, here’s a quick calculation for you.
The first and most obvious recruitment expense is the monetary cost. The amount of money spent on setting up a hiring process includes;
- Recruitment team’s salary
- Commission or referral bonuses
- Recruitment software
- Paid job ads
- Online job board subscriptions
Hiring new employees includes a robust recruitment process that comes at a hefty price. According to the Society for Human Resource Management, the average cost-per-hire is $4,129.
In the world of business, time is money. The amount of time wasted is a huge loss for a company. Scouting for recruits is one of the most time-consuming parts of the hiring process. It takes about an average of 1-2 months (52 days) to fill a job position.
Why is the hiring phase so time-consuming? As mentioned earlier, recruitment is a full-fledged process with different stages.
Stage 1- Creation and promotion of job posts.
Stage 2- Filtering and short-listing possible candidates. Recruiters need to sift through piles and piles of CVs, conducting interviews and skill assessments.
Stage 3- After finding the right candidate more time can be drawn out for contract negotiations and employee onboarding.
How does a long recruitment process cost a company?
To simply put it, the more time spent looking for the candidate means more productivity lost productivity time and output is lost for the company. While the time-consuming process in the recruitment stage doesn’t come with a direct price tag, it is costing your current employee’s time.
One of the most costly hiring mistakes a company can make is hiring the wrong person for the job. By hiring the wrong candidate, a huge sum of money and time has been wasted.
Not only did the company waste money on salary and training but also on the time and effort given in the recruitment process. The Department of Labor estimates that a single bad hire equals an alarming 30% of the employer’s potential first-year’s earning.
Hiring a bad apple can have negative effects on a company’s overall productivity and morale. With a missing asset in the team, existing projects can be put on hold. Additionally, the whole hiring process will be conducted again to fill the position.
Participating in career fairs
To find the best talents, you need to cast a wider net. Career events are a great way to meet prospective candidates. While online recruitment is a lot more convenient, you can’t tell much about a candidate on paper. Meeting in person helps break that barrier as you’ll have a better perspective of a person’s potential.
So, how much do these career events cost?
Glassdoor states, participating in a single career event can cost from $125-225. Take note that this does not include other costs such as flight, accommodation, etc. While participating in these in-person events is a great opportunity, it does come with a cost.
Partnering with an outsourcing company is another way to find recruits. Instead of building an in-house recruitment team and searching for the right talents. Companies can take advantage of a recruitment agency’s available talent pool.
When considering whether to recruit in-house or through an agency, it’s important to consider which is more cost-efficient for you.
Hiring Expenses Worth Making
After learning about the expenses companies pay during the hiring process, money can be wasted. So, what can you do to avoid these extra hiring costs?
Consider not having in-house recruitment
Is it necessary to have an internal recruitment team? For most companies, today, having a dedicated recruitment team isn’t necessary. With more and more startups on the rise, small teams are successfully running their operations without a dedicated HR team.
Small businesses now have the option to hire services from recruitment agencies. If you’re slowly building your team, hiring a recruitment specialist shouldn’t be your priority. You need to invest in professionals who can contribute to your company’s main operations.
Instead of setting up an in-house recruitment team, invest by partnering with outsourced recruitment specialists. You’ll be able to focus on your main responsibilities with no worries.
Do background checks
One of the best ways to ensure that you’re hiring the right person is to look into their employment history. A person cannot be summarized with just their resume. Before making an offer, it’s important to do a background check.
While they might be ticking off all the skills needed for the job, are they sociable and respectful colleagues? Contacting their past employers and colleagues can give you a better perspective on what they’re like.
Invest in your employee training
Do you know what’s more costly than bad hires? Losing good hires. Top talents are hard to come by. With 35% of small businesses and 47% of midsize companies say that hiring top talent is their #1 competitive strategy, losing one would be a big loss.
How do you retain top-talents?
The National Research Business Institute states, 23% of employees change companies due to the lack of development and training opportunities. With a high employee turnover rate, companies saw drastic changes in productivity levels, an increase in training and recruitment expenses.
To keep your top-talents onboard, you need to invest in them. Giving opportunities for career growth shows that you not only value them but also support their career progression.
The return of investment in employee training is beyond expectations. In fact, according to Gallup’s report, highly engaged employees in the workplace outperform their counterparts by 147% in earnings.
Your Talents Are Worth The Investment
Running a business is all about finding ways on how to take things to the next level. By taking your recruitment process to the next level, you’ll be able to reap great returns. Your employees are a reflection of your business. Adding value to your talents adds value to your business.