How Your Company Can Reduce Its Hiring Costs and Find Top Talent
According to Penn Foster, a U.C. Berkeley study found that the average cost-per-hire for a new employee was approximately $4,000, and as much as $7,000 for a higher-level professional. This cost was found to be even higher for small businesses. The Society of Human Resource Management (SHRM) found that it took approximately 42 days for a firm to complete a hire, depending on the job and the industry. A lengthy search incurs costs for a replacement worker and may reduce productivity while a less experienced temporary worker takes over until a new employee can be found.
Companies that can reduce cost-per-hire may be able to improve their bottom line. But how does one do this and still find the best employee that can help the organization grow?
What is Included in Recruitment Costs for a New Hire?
For companies doing their own recruiting, costs can include job postings, job board fees, background checks, an internal Applicant Tracking System (ATS), career events, career pages and marketing materials like benefit brochures. Attending career fairs have other costs, such as travel and accommodations.
One recruiting cost that is more difficult to measure is one’s time. According to Entrepreneur.com, small-business owners can spend as much as 40 percent of their work week engaged in non-revenue-generating tasks. This includes human resource management activities such as recruitment. Building a career page on a corporate website, advertising positions, researching candidates on social media, communicating with and managing candidates and conducting interviews can be extremely time-consuming. These activities take managers and other staff away from their regular work duties, which can lead to lost productivity, directly affecting growth and profits.
What Is a Cost-Per-Hire Reduction Strategy?
A company’s cost reduction strategy is the process used to reduce the cost-per-hire for each new employee, so that the company can realize greater profits. These strategies can vary depending on their services or products, and which part of the business they are focusing on. A cost reduction strategy for hiring new employees would include examining various options. The organization may consider finding an HR manager whose duties would include hiring. They might add the tasks to an administrator’s duties or hire a Personal Employer Organization (PEO) that would be your staff’s legal employer, handling all the payroll, benefits and other HR functions. Another way to reduce your cost is to hire a professional recruitment agency to work on an as-needed basis.
What Can a Business Do to Reduce Its Hiring Expenditures?
There is no “one size fits all” solution to reduce cost-per-hire. The best way to handle recruiting and talent acquisition will depend on the size of the organization, their industry and their hiring needs. Following are different staffing options which may reduce your cost and save both time and money.
- Institute an
Employee Referral Incentive – Even if the
company doesn’t wish to offer a “finder’s fee” to employees for bringing in
referrals, it is possible to strengthen the brand so that employees will want
to encourage people they know to apply even without being compensated. The
downside of an employee referral program is that there is no control over the quality of the referrals.
- Have a Social Media Presence – A 2016 SHRM study found that 84 percent of companies used social media to recruit new hires, and 71 percent of recruiters said that it was effective in reducing the “time-to-fill” for non-management jobs. This tactic had a 67 percent success rate in filling management positions. A study by the Aberdeen Group found that 73 percent of millennial job seekers found their last position on social media. But of course, developing and building a social media presence and attracting the right followers takes effort and manpower.
- Promote Career Opportunities
on Your Corporate Website – If the
organization has a robust website with considerable traffic, having a career
portal that includes information about the business, open positions and online
applications can be very effective. This is most advantageous for larger
companies, since it requires regular maintenance and staff that can review
- Build a Talent
Community – There may be applicants with
strong skills that aren’t appropriate for the job they applied for, and other interested
people who aren’t right for current positions. Maintaining a vetted pool of individuals
who may be exploring new careers can help the organization fill future
positions faster and more successfully.
- Hire an HR professional – A growing establishment may wish to hire a full-time human resources specialist. However, the salary for an HR professional ranges from $91,000 to $120,000 per year. Also, an HR specialist may be responsible for payroll, benefits, training and employee relations, in addition to the hiring process. It may make more sense to have a professional dedicated to matching each open job with the right candidate.
- Use a PEO – One way to cut hiring costs is to outsource HR
altogether. However, companies may not wish to entrust payroll, benefits and
other HR functions to an outside organization.
- Outsource Recruiting to a Professional Firm – Partnering with a business-savvy staffing agency offers many benefits, from a well-established talent community and social media presence to an intensely focused, “when you need it” recruiting service that can reduce your overall cost-per hire. The best recruiting agency will integrate seamlessly with your operations and become part of your HR or management team.
Finding the Best People: Balancing the Cost and Cost-Effectiveness of Recruitment
An organization may be tempted to handle talent acquisition themselves, to save money. However, being besieged by a large field of candidates who aren’t sufficiently skilled for the position or who aren’t right for the company’s culture can waste valuable time and cost more in the long run.
There’s considerable value in trusting the recruiting process to professionals who have years of experience and who maintain a highly vetted community of premiere candidates. They will be able to quickly generate a small group of the best people, so that the manager can conduct interviews, get to know each candidate and hire in a timely manner.
Fast hiring of skilled people greatly reduces downtime, so that your company can continue growing. Working steadily with a recruiting agency that knows your business lets you handle every personnel change nimbly for long-term success.