Generally, when evaluating the cost of recruitment for a company, the tendency is to only account for salaries and the direct expenses related to them.
However, in reality, there are a multitude of parameters that, once considered, can lead to significant expenses or charges. These include indirect costs, external fees, the time and human resources employed, among others.
This article shows how to analyse the cost of recruitment and the effective strategies and tools for optimising it.
Analysis of Recruitment Costs
If you wish to optimise the cost of recruitment, it is essential to proceed with its analysis beforehand. This way, it becomes possible to identify the stages or actions that required resources on financial, material, and human levels.
If you’re wondering how to calculate the cost of recruitment, you should know that the expenses related to the hiring process are divided into two categories: direct and indirect costs.
Direct Costs of Recruitment
Direct costs are directly attached to the recruitment process.
Publication Fees for Job Offers
If you wish to carry out recruitment on behalf of a company, it’s necessary to consider the costs associated with the dissemination or publication of the job offer. These fees can vary between £500 and £800 depending on the profile sought and the platform used.
Although professional social networks like LinkedIn can represent a sourcing solution, the use of certain tools or features for better targeting can incur significant costs.
Recruitment Agency Fees
The services of a recruitment agency are quite expensive, varying between 15% and 25% of the annual salary of the candidate chosen by the company.
For searching specific profiles for high-level positions, fees can reach 35%, more than a third of the annual salary of the recruited candidate.
Costs Associated with Interviews and Tests
Interviews, tests (logic test, skills assessment test, psychometric test, etc.), and candidate background checks can significantly impact the cost of recruitment.
The fees for recruitment officers and the costs of tests vary based on several parameters including:
- The position to be filled;
- The type of test;
- The test tool used;
- The number of candidates;
- The duration of interviews, etc.
Indirect Costs
Yet underestimated, indirect costs of recruitment can be more significant than direct costs. They include, for example, the loss of earnings due to the time needed for the integration of the chosen candidate, the cost of training new employees, etc.
Loss of Productivity During the Recruitment Process
The departure of an employee triggers a chain reaction across the entire team. If the functions they performed are not taken over by the new hire within reasonable deadlines, a decrease in productivity will be noted within the team.
Costs Related to the Integration of the New Hire
If you optimise recruitment and find the ideal profile, the company will also need to implement means to facilitate their integration into the team. This integration involves:
- The establishment of their employment contract;
- The preparation of their workstation and the necessary equipment for their role;
- Their training, etc.
That said, setting up all these elements takes time and costs money, thereby increasing the cost of recruitment for a company.
Strategies for Optimising Recruitment Costs
It is possible to optimise recruitment costs through certain strategies. Utilising the right online recruitment platforms, developing the employer brand, and implementing an effective recruitment strategy are some avenues to explore.
Efficient Use of Online Recruitment Platforms
Before starting the hiring process, the company must first assess the most suitable recruitment platforms for its industry. Indeed, this targeting allows reaching candidates whose profiles best match the job offers.
Targeted dissemination of these offers can save time and significantly reduce the costs associated with the hiring process.
Developing a Strong Employer Brand
The image a company projects to its employees and potential hires plays a critical role during recruitments. Known as the employer brand, this image helps a company to develop its attractiveness and attract genuinely interested candidates.
A well-developed and managed employer brand will allow the company to make its sourcing tools more effective and to reduce the overall cost of recruitment within it.
To develop a strong employer brand, a company must communicate diligently about the values it promotes, its culture, and its missions. It should:
- Create a positive image of itself both internally and externally;
- Highlight the benefits of the position and the professional development opportunities for the future employee;
- Provide a positive employee experience to retain the talents that join its team.
Implementing an Effective Recruitment Process
Implementing an effective recruitment process can help reduce certain expenses. Indeed, repetitive and time-consuming phases can increase the cost of recruitment.
To optimise their execution, the company should:
- Draft a clear and detailed job offer: the offer must be well-structured and include important information such as job titles, required skills, benefits of the position, and the location of the workplace;
- Diversify dissemination channels: diversifying channels not only reaches a wider target but also focuses on profiles that meet the set criteria;
- Simplify the selection processes: using a candidate management tool and a personality test will facilitate the selection of candidates;
- Automate time-consuming steps: some administrative procedures like sending emails, drafting confidentiality agreements, and validation processes can be extremely time-consuming. Implementing an automation system will save time on these tasks and allow focus on more significant work.
Technologies and Tools to Optimise Recruitment
Certain tools can significantly aid in reducing the cost of recruitment. Along with the previously developed strategies, they can prove to be very effective.
Applicant Tracking Systems (ATS)
Applicant Tracking Systems (ATS), when properly used, can reduce the cost of recruitment. Their use brings several advantages, including:
- The automation of repetitive tasks;
- The analysis of candidate performances;
- Time-saving;
- The ability to reach a larger number of qualified candidates;
- Supporting the company’s sourcing strategy;
- Access to evaluation indicators of the hiring process;
- Guidance in compliance with current legislation, etc.;
- Improvement of the employer brand.
To select the most suitable ATS for your company, you should:
- Determine your recruitment management needs;
- Define the budget to be allocated;
- Evaluate the functionalities offered by the ATS;
- Test the software and ensure it is user-friendly;
- Check if the customer service is responsive;
- Assess the analysis tools of the software.
Predictive Analysis in Recruitment
Predictive analysis tools are also valuable in optimising recruitment costs. They help companies anticipate future events and behaviours of their future employees.
These tools also enable the prediction of strengths and weaknesses, facilitating decision-making and the development of effective strategies to address employees’ weaknesses and handle crisis situations.
Predictive analysis tools also help to:
- Reduce the risk of turnover and recruitment errors;
- Improve the recruitment process;
- Encourage employee performance;
- Determine the candidate whose profile matches the company’s values and needs.
Training and Development of Recruitment Teams
Another solution to reduce recruitment costs is to train teams responsible for recruitment in the use of efficient and market-adapted practices.
Investment in Continuous Training
Investing in the training of your recruitment teams is essential if you wish to reduce recruitment costs.
Training will enable your recruitment officers to:
- Identify the company’s real needs in terms of skills and communication;
- Negotiate contracts with new hires;
- Understand employment market trends.
In other words, continuous training is indispensable not only for ensuring the relevance of your hiring process to the employment market but also for responding to the constantly changing needs of companies and addressing talent shortages.
Adapting to the Recruitment Sector
Reducing recruitment costs is a crucial challenge for any company, given the specific context of the recruitment sector.
The expectations of companies and job seekers have become more specific. As new factors come into play, it is essential for the company to innovate in its recruitment process.
It should use digital means (sourcing tools, predictive analysis, and candidate management tools) to remain competitive. We’re talking about Recruitment 2.0.
Optimising Recruitment Costs: Key Takeaways
Optimising recruitment costs is a priority for any company. While direct costs of the process can be anticipated, indirect costs can lead to significant expenses if not managed properly.
To reduce costs, the company must rethink its recruitment strategy by choosing the right recruitment platforms and developing its employer brand. Additionally, the use of candidate management software will be greatly beneficial during the hiring process.
Any company wishing to reduce recruitment costs can achieve this by taking into account the various strategies and tips mentioned in this article.
