Excellent, efficient recruitment is essential for the growth of a successful business.
Recruitment is a costly endeavor, but there are ways to reduce your costs and lower the risk of your investment.
SMEs have to evaluate the benefits and costs of internal recruitment, technology-based recruitment, and outsourcing recruitment and determine which one will save them the most time and provide the most reliable service.
Whenever you are responsible for running a business, no matter its size, there are so many essential costs involved that have to be factored into annual budgets and profit projections. For business owners and the HR department, one of the most important is that associated with recruitment.
Sadly it is a rare occasion that the exact right person walks in off the street on a precise day your budget and need opens up for the position (wouldn’t that be nice!).
In reality, whether you need a custodian or an MD, you will have to factor in the recruitment cost when budgeting for the role and to measure its worth.
Why does recruitment cost so much?
In a nutshell, because it is vitally important to get the right person. Every successful company knows that having the right employees, of the highest quality, can make such a massive difference to your overall productivity and financial performance.
Hiring the wrong person, as we discuss in our article the cost of a bad hire, is a mistake that can have lasting repercussions for your cultural morale and your budgets. This means that making sure you are using the right recruitment tools to find the best quality candidate is a worthwhile investment, but it is indeed an investment. That said, there can be a lot of suggested procedures that can increase that cost, and not all of them are necessarily appropriate for your organization. The key is to find the solution that works best for your business.
So how can you save money on recruitment?
There are a few ways in which you can lower your recruitment costs, but since they might not always be successful, you have to balance your needs with your budget:
- Depending on the position you are recruiting for, you may well be able to (and have the time to), prepare your specific job description and utilize your existing network and social media platforms (i.e., Linkedin) to advertise the job at a little cost.
- A referral from someone you trust can go a long way towards finding the right person for the job, especially if the person making the recommendation knows your business and understands its culture.
- If you are smart enough to have an organization filled with engaged employee brand ambassadors, they are also an excellent resource to use and may well have good instincts regarding referring people for certain positions.
- If you work in HR, it is also a good idea to pool your talent and hang on to the contacts of people who you might be interested in later on.
- HR Managers and business owners also need to bear in mind that the primary facilitator to truly low-cost recruitment is to focus on the well-being and engagement of your existing employees; replacing a departing colleague can be a costly procedure in time and lost expert knowledge.
Can technology help?
An excellent resource that is available to promote more low-cost recruitment solutions is for your HR team to implement recruitment software into their process. By utilizing a platform such as Aqeed People, the HR department will be able to streamline their process, quickly access the relevant data when it comes to decision making and frees up more of their valuable time. Recruitment software allows you to make use of the right tools, track the progress and ensure that all potential candidates are meeting a base level of requirement before interviews begin. This level of efficiency is a massive cost-saver regarding time and effort, which for the HR department can always be put to far more valuable use.
In 2017, a study showed that over 75% of hiring managers were using a type of recruitment software and that 94% of them noted a vast improvement in their hiring process. In a candidate-driven market, when the average cost of recruitment is around AED18,000 at least, utilizing state-of-the-art recruitment software would increase the efficiency of the process at a much lower overall cost.
What about recruitment agencies?
Employment agencies exist to assist organizations who wish to outsource the bulk of the hassles associated with recruitment. The right recruitment agency will offer a specialized set of skills that will be used to help you determine the exact requirements you are looking for, strategize the most effective methods of reaching the right audience and weed out the bad fits before presenting you with a shortlist that meets your needs. According to Entrepreneur Middle East, small business owners can spend 40% of their timing on tasks that don’t directly impact income, such as hiring. Recruitment agencies, on the other hand, only get paid when they find you a successful candidate, and that may well be staggered to accommodate a suitable probation period to ensure the right fit has been found. On the downside, the usual rate for this is around 15-25% of the individual’s annual salary, which if you are hiring a superior position, can be extremely expensive.
While utilizing an employment agency can require a fixed financial commitment, for some companies it might be well worthwhile, mainly if they don’t have a large in-house HR function. Since a study by Oxford Economics concluded that average cost of replacing an employee would be around AED 145,000 overall, there is a compelling reason to consider that the cost of engaging a recruitment agency could well be less detrimental to your budget than risking the hiring of a bad fit. If you are an SME, internal HR may end up being cost prohibitive for your organization.
Ultimately, success comes from the right investment
The main thing to consider when reviewing your recruitment cost and procedures is that the negative cost of making the wrong hire will far outweigh any costs you incur in trying to find the right person. It is about finding the right balance. Too little investment, such as an internal social-based search, may well prolong the time required by your existing staff, costing you more in the long run. Outsourcing to a recruitment agency may produce high-quality candidates, but at a very high cost for companies who are still growing.
Equipping your HR Manager or HR team with the right HR software tools and budget means they can not only take the lead on a more effective search while reducing the overall recruitment cost.
They can also start as they mean to go on and engage with the candidate before they join the team, which could make all the difference to a fantastic potential candidate looking for their ‘right fit’. HR software equals more efficiency and more engagement, which benefits everyone. Never forget that those who know your business the best will be the best at finding the right employees to join the team.