It’s time to add a new member to your team, and although you don’t have an in-house recruiter, you do have HR professionals that can handle it. After all, that’s what they do, right?
If this thought process sounds familiar, you are not alone. Many employers choose in-house hiring because it appears to be the most cost-effective option for the company. If your team can do it in-house, you avoid the cost of paying someone else to do it for you. However, choosing this path may not take into consideration the hidden costs associated with in-house recruiting.
From the time your team spends drafting a job description, sifting through resumes, and making multiple calls and emails to arrange interviews, to the hard dollars you spend on multiple websites for job advertising the costs of hiring in-house can quickly add up. And, if the new hire is not a good fit, the cost rises exponentially as your team grapples with recruiting a replacement.
Hiring a professional placement firm can help you avoid many of these costs and ensure your organization hires talented individuals who are a great fit.
The Costs of In-House Hiring
Every task performed by your organization has a cost. It could be the time it takes to complete, which comes out of your payroll. Or it may have a distinct cost, such as upgrading software. While expenses may fall under unrelated budget categories, they all reduce your profit margin. Recruiting in-house is no different.
When your HR team recruits, the business incurs several direct costs, including:
- Job advertising
- Background checks
- Recruiting software
- Skills assessments
- Travel for interviews
Additionally, the time your team spends on these activities, communicating with candidates, and reviewing resumes adds to the cost of recruiting. These are the costs you may expect as an employer. However, they are not the only expenses, nor are they the most costly.
The Hidden Costs
Many businesses underestimate the full financial impact internal hiring can have on their organization.
Consider a small, growing technology company that needs to expand its cybersecurity department. Company leaders decided to recruit in-house to keep expenses down and rely on existing team members to help generate the job description, define the job qualifications, and vet candidates. On paper, the process seems solid, but in practice, it is a bit cumbersome.
The security team, already a bit understaffed, now has another task on its plate. Team members do their best to complete recruiting tasks and get their work done, but they are becoming less productive and working long hours. After an extended search, the team finds a candidate they believe will perform well in the position. However, after just a few weeks on the job, it becomes clear the new hire lacks the training and experience needed for the job and can’t quite keep up with projects.
After a month, the new hire decides to quit, the team feels deflated, and they are still short-staffed.
Unfortunately, this hypothetical scenario (and others like it) plays out in businesses nationwide every day. Their well-intentioned efforts to save money by keeping recruiting in-house left them with significant costs, including:
- Lost productivity – Dividing the team’s time between recruiting and daily tasks makes them less productive
- Potential for increased turnover – Employees shouldered with additional tasks and asked to work longer hours are more likely to feel overworked and choose to leave
- Additional recruitment costs – A poor hire who leaves, leaves the company with all the costs of recruiting, onboarding, and training a replacement
While it doesn’t appear as a line item in the budget, these hidden costs can potentially be more damaging to your business than the expenditures you see. Recruiting companies have the skills and expertise to help clients like you avoid the hidden costs of in-house recruitment.
How Professional Staffing Firms Cut Costs
1. Save You Time
Time is money and a finite resource. You pay each employee for the work they accomplish. Anything that detracts from their time for tasks that require their unique skills makes those tasks take longer. The project that may have been done by the end of the week may have to wait until next week if they spend half a day just reading resumes.
Recruiters can take over many time-consuming tasks and free up your team for the work you would rather they do. This could include posting job listings, screening candidates, administering tests, conducting interviews, communicating with applicants, and scheduling appointments. Once they have the list narrowed down to the top candidates, your team can lend a hand in making the final decision.
2. Improve Hiring Outcomes
The cost of a bad hire is difficult to quantify, though many sources estimate that it equals 30-50% of an employee’s first-year salary. That number may cover the cost to recruit, hire, onboard, and train a replacement, but it won’t give employees back the overtime hours they had to work while the company was short-staffed. Hiring the best candidate with the least amount of disruption to company culture and workflow is paramount. A skilled recruiter can help you achieve that outcome.
With an expansive network of contacts and extensive knowledge of your industry, they are experts in finding the best fit for each position. They thoroughly vet candidates to determine who will thrive and help your company grow. A recruiting firm can provide continued support even after completing the search through onboarding or training new employees. This ensures a smooth transition and integration into their new position.
3. Reduce Turnover
Two of the leading reasons employees look for a new job are:
- Better pay/benefits
- Desire for more growth
Employers may not be able to meet every applicant’s expectations. However, discussing these matters openly and directly before hiring a new employee can prevent them from becoming an issue shortly after they join the organization.
A professional recruiter will know what competing companies are compensating employees for similar roles. They can help you determine what pay scale is reasonable and which benefits will make you a competitive choice to attract and retain top performers. Recruiters can also set expectations upfront, letting candidates know the growth potential available, the new skills they might learn at your organization, and how their careers will advance by working at your organization. Misaligned expectations regarding compensation or growth opportunities should never come as a surprise.
4. Use Cutting-Edge Technology
What used to be a manual process where decisions were made based on first impressions has grown into a highly technical undertaking. Professional recruiters today have many tools to help them determine which candidate is best suited for a position. While you could invest in the technology and learn to use it, it may not be worth your time or money.
When you partner with a search firm, you get access to all the tools in their arsenal, and you don’t have to incur the cost or the learning curve, either. Your recruiter will combine their industry knowledge with the best resources available to identify skilled candidates on behalf of your company.
5. Create a Scalable Process
Most companies don’t follow a linear growth pattern. You may have a banner year and hire 20 employees one year and hardly hire at all the next. If you expand your HR department based on years of substantial growth, you can quickly find yourself overstaffed during slower periods. And if you invested in software and tools you don’t use regularly, that’s more money out of your pocket.
Your HR department is vital. However, a growing company may do well to outsource recruiting efforts. Professional recruiters can fill in, acting as an extension of your company when your hiring needs are high. When your needs decrease, so can their services and your cost. Unlike a full-time in-house HR professional, you don’t pay their salary and benefits when you’re not using their services.
Reducing Recruiting Costs
Doing everything yourself is not always the most cost-effective or wisest way to conduct business. Often, you can achieve the best outcomes when you hire other individuals who have knowledge and experience that you don’t. You may even need to reach beyond your company, especially for recruiting.
When it comes to your company, the stakes are too high, as is the cost of a bad hire. Attempting to save money by recruiting in-house doesn’t always work out. So, why take chances? Recruitment professionals know how to place individuals with companies that need their unique skills. They have the tools and expertise to make sure your next search is both efficient and cost-effective.