The Real Cost of Recruitment

5 Ways to reduce the cost of Recruitment

Most people are aware of the costs their business faces on a daily basis, but did you know that recruitment may be one of your largest unforeseen expenses? Most companies underestimate the cost of recruitment by 90-95%, a thriftless mistake in the current economic climate, and one that can be radically reduced.

Direct costs of recruitment include:


Subscription costs on social media platforms or recruitment databases, and agency costs are the most recognised cost of recruitment. These costs can be substantial for executive and management positions, but can be in excess of $20k for general positions.

If recruitment involves travel by either an interviewer or candidate, both parties will need to be reimbursed.

An average of $1,000 is spent on training a year for each employee. Employers will wish to break even on this investment as soon as possible, but often, new employees do not perform as expected and productivity suffers.

Indirect costs of recruitment include:

Business Time

The time taken to recruit is a huge overhead cost and can take anywhere from 2-12 weeks traditionally (job opening to accepted offer). In some cases, the role at hand will be unfilled during that time, leading to a loss of potential productivity.
Loss of Productivity

Other employees are often disrupted (irritated) in the process of hiring and training new employees. The burden will often fall on individuals to pick up the slack.

Did you know that over 20% of new hires leave within the first 12 months of employment? It is difficult to develop a cultural rapport between candidate and company in the standard recruitment process, and only after the employment contract has been signed, may new hires feel that they do not fit in.
Workplace Culture and Employee Morale

In external recruitment, loyal and long serving employees are not given the opportunity to apply for the position. This may create dissatisfaction amongst staff and lead to a loss in productivity.

So what are the options that you can consider…?

1) Consider internal recruitment!

This might be an obvious option, but is often overlooked. It saves precious time and money. Available positions could simply be posted on a notice board or the company intranet site, there would be no need for extensive interviews, reference checks, or personal profile testing. The need for extensive training and orientation is reduced, and it improves productivity and morale as employees are rewarded for their hard work and dedication to the company.

Surprisingly, the challenge for many businesses is often simply not knowing who may be suitable for internal positions.

2) Consider conducting initial interviews by Video

Travel expenses can simply be reduced by conducting initial interviews by the use of video. Most people have smart phones that allow instant video messaging and would be very effective to eliminate travel to any remote business, such as Mine Sites.

3) Record the details of past applicants

Do not overlook unsuccessful candidates. They may not have been right for a position at the time, but their talent may be utilised in the future as it develops, or if another more suitable role becomes available.

The challenge for many businesses is having a simple process for capturing details of past applicants.

4) Get your employees to recommend people

If you’ve got a happy workforce, they should have no issues in recommending their contacts to apply for positions. Your workforce would have a good understanding of culture of the business and are possibly the best promoters for your business. By offering employees an incentive is a simple way to reduce costs. The potential reach could be massive, because if you have a workforce of 50 employees, and if only 10 of these employees recommends 3 potential candidates, you have got 30 candidates.

5) Implement the right system

Most small and medium sized enterprises are not in the position to implement a complete HRMS or an ERP, and often rely on ineffective manual processes with the misconception that the cost of such systems is too high. There are affordable systems on the market, such as OrgView, which are cost effective and easy to set up. By allowing the business to record and store information on people – current and past employees; unsuccessful candidates; connections made through networking, the process of recruiting the correct person to fill any role can be significantly reduced.

At the end of the day, recruitment costs should be considered in light of the potential benefits of acquiring desired candidates, but smart businesses can attain quality employees without blowing the budget.

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