Hiring not only takes time but is also one of the major overall expenses of any organization. While spending money to hire new candidates is justified, making sure that the talent acquisition process is cost effective is one of the biggest responsibilities that recruiters and CHROs have consider over the course of their career. So what steps can help a TA manager contain the recruiting costs without sacrificing the quality of talent being hired? Let’s examine.
What is the Cost of Recruiting Employees?
Although the recruitment costs varies from company to company and region to region, the different components that contribute to the hiring costs are more or less the same. These components include job advertising expenses, recruiter salary & benefits, employee relocation costs, sign-on bonuses, employee referral payouts, third party recruiter fees amongst others. The average cost of hiring a replacement is significantly higher than that of a new employee as it also adds an additional component of separation costs that includes severance pay, time spent conducting exit interviews amongst others. There are other components of recruitment costs that are harder to quantify such as the hours of productivity spent until the position gets filled, the time taken by the new employee to achieve a productive level and others.
How to reduce hiring costs?
Now that we have a fair idea of the cost of recruiting employees, the next right thing to do will be to find ways that reduce the overall cost of hiring qualified employees. Here are some of the most effective ways of reducing recruitment costs:
- Automating recruiting process is a cost effective recruitment strategy
- Hiring qualified and quality candidates is a good idea for reducing recruitment costs
- Measuring results with reports and analytics will reduce the cost of recruiting employees
- An employee referral program leads to reduction of recruitment cost
- Social networks reduce the cost of recruitment and selection
Automating recruiting process is a cost effective recruitment strategy
Automation in recruiting is great cost saver as it reduces the time spent in doing the various recruitment activities which has a direct impact on the productivity of recruiters and allows them to hire more thus reducing the overall costs of recruiting. With automation, less number of work hours will be spent in doing repetitive tasks, such as report generation, job posting, interview scheduling and other recruitment activities, which will directly impact the productivity and final bottom line of the business.
Also Read: The Recruitment Automation Trends in 2019
Hiring quality candidates is a good idea for reducing recruitment costs
It is pretty evident to every recruiter in the business that hiring replacements is a costly affair. If you are not careful and accurate in your selection process the first time, re-hiring can be expensive. Therefore, investing in hiring high quality candidates the first time is worth the efforts, even if it means spending a little extra in terms of time and remunerations being offered. While it may seem counterintuitive but it is important not to ignore the quality of hire during the selection process while trying to reduce the cost per hire. A study by SHRM reveals it typically takes 6 to 8 months’ salary for replacing an employee.
Measuring results with reports and analytics will reduce the cost of recruiting employees
Using automation tools in recruiting has another advantage. These tools have the ability to track and analyze the huge amount of data generated during the hiring process. By using the latest analytical technologies, recruiters can easily track the effectiveness of the recruitment efforts and implement the corrections wherever necessary. Also, by making the recruitment process metrics-driven, it will help identifying the methods that are proving useful in finding the candidates, and the methods which need improvement, thereby ensuring best recruitment performance and least resource wastage.
An employee referral program leads to reduction of recruitment cost
An employee referral scheme is a long term strategy for saving money spent in hiring candidates. While there will be immediate expenses related to bonus payouts while setting up the employee referral program, the long term benefits of hiring through referrals will be able to offset this initial investment. Employee referrals have long been recognized as the most effective source of quality hiring. Employees only refer candidates those they know will fit the role’s requirements and fit the organization’s work culture. Such candidates, if hired, will be less likely to leave. Referrals have been the subject of a number of researches and stats reveal employees hired through referrals tend to stay longer.
Also Read: How to Encourage Employee Referrals?
Social networks reduce the cost of recruitment and selection
The millennial is a social media savvy generation which again is an opportunity in disguise for the recruiters. Social networks like LinkedIn and Facebook are great channels for not only advertising job openings but also spreading word about your company’s value and vision, and work culture. Most of the features on these social networks are free to use and it’s only when the engagement with audience is at advanced level that one needs to subscribe to the paid features. Building a company page, posting daily updates, posting open jobs, all can be done easily and if done right, the reach and popularity of social media will ensure that companies don’t even have to use paid platforms to advertise their jobs, thus saving recruitment costs further. Also, recruiters must motivate employees to share the jobs on their personal social network which can bring in more reliable and qualified candidates without spending a fortune.