Business equals people. This means that in the face of tough market conditions and ongoing challenges, the ability to attract the best talent in the recruitment market is key to competing with the best in the UK.
But how do you maximise this strategy whilst keeping costs low at the same time? To achieve this, it’s imperative to understand the real costs of recruitment as these often become misplaced when engaging in the recruitment process.
Concern about costs amongst senior HR professionals
Managing costs was identified by senior HR professionals as being their top organisational priority in the 12 months to 2011. (Source: A Barometer of HR Trends and Prospects 2011, Chartered Institute of Personnel and Development)
A big part of this is the cost of recruitment. Not surprising when you consider that the median recruitment cost of filling a vacancy is £7,500 for senior managers/directors and £2,500 for other employees (adjusting for accuracy) (Source: Chartered Institute of Personnel and Development 2011 Resourcing and Talent Planning Report).
Whilst this cost has been found to be decreasing compared with previous years, it is still a high percentange of overall HR costs. There’s no doubt that cost per hire is still a major obstacle to companies seeking to stay ahead in their market. With 50% of organisations now reporting a reduced recruitment budget (Source: Chartered Institute of Personnel and Development 2011 Resourcing and Talent Planning Report), keeping costs low whilst maintaining quality of candidates is an important paradox for companies to address in the coming months and years.
Solving the quality/cost paradox: an alternative
Some businesses are starting to adopt an approach that does succeed in solving the cost/quality paradox. Two companies, RSM Tenon and Greggs, have achieved a 40% reduction in their cost per hire. The step is to address the misconceptions about the costs of recruitment versus the actual costs.
Addressing the myths: the perceived costs of recruitment
There are plenty of misconceptions about the costs of recruiting talent. These persist in the face of the very real challenges that HR professionals are up against today.
In recent research, HR professionals were asked about their future recruitment cost control predictions. Two respondents in three (66.2%) said that their organisation would look to reduce the cost of recruitment within the next 12 months (Source: Xpert HR).
So while many recruiters are keen to cut costs, what are the main misconceptions that persist around the costs of recruiting and retaining talent?
Getting the talent without the fees: It is understandable that in tougher economic times, recruiters are keen to bring talent on board whilst cutting the costs. Yet finding and retaining talent starts with a strategic recruitment funnel. On the surface of it, this more DIY approach to finding talent seems to make sense. But dig a little deeper and it’s easy to see the potential risks of trying to reach the highest calibre of candidate without specialist help, with issues such as staff attrition being a significant cost to business. This is about settling for second best – and potentially achieving second rate results.
High recruitment fees: High recruitment fees are commonly viewed as a significant factor in high cost per hire. Again, in more challenging economic times this is an understandable misconception. But, again when we compare the overall costs of getting recruitment wrong (i.e. hiring the wrong person, multiple rehires etc) an initial recruitment fee is a small cost. This myth is possibly a popular one because the recruitment fee is an overt part of the recruitment process, unlike the more hidden, but very real issues that increase the cost of hiring.
Small amount of resource: Another common myth, a small amount of resource is again understandably viewed as a major cost in recruitment. The amount of resource spent recruiting one person can end up equating to several weeks of time once each stage of the recruitment process has been completed.