Hiring new employees is arguably the most significant activity under HR’s purview. One wrong hiring decision can negatively impact the success of the entire business, not to mention the added costs of having to hire a whole new employee once the bad hire is removed.
Due to the high risks involved in recruiting, employers are consistently evaluating their strategies, looking for new ways to streamline the process and ensure high-quality outcomes. In the quest for the best hiring tactics, every organization eventually faces the same dilemma: Should recruiting be handled in house, or should it be outsourced to an external specialist?
It’s not an easy problem to solve, but it does hinge on one (seemingly) simple question: “Which option will provide me with a high-quality hire at the most cost-effective price?”
Both in-house and outsourced recruiting have their advantages and disadvantages, so before you pick one over the other, you need to do a little research. This is especially true for earlier-stage companies, which may not have dedicated hiring teams yet. At that point, you’re not simply determining whether you should outsource — you’re deciding whether to invest in building an internal recruitment team.
Ultimately, your research into the right recruiting strategy for your company should focus on quality and cost. It’s a tricky balance to maintain: You don’t want to spend too much money, but at the same time, you don’t want to choose a cut-rate solution that leads to lower-quality talent.
Where Are You Most Likely to Get Quality Candidates?
In the recruiting process, your candidates have zero obligation to be loyal to you. In fact, if someone has applied to your job, chances are they’ve applied to a few others as well. You and your competitors are all vying for the same talent, which means part of the hiring process is convincing a candidate to choose your company over the others.
Let’s be real: Top-quality candidates know they’re valuable. If they don’t think your business is deserving of their talent, they’ll take a position elsewhere. During the hiring process, you need to paint a desirable — and accurate — picture of your company. You need to sell your company to the candidate. If you’re going to lean on your internal team to recruit, then you need to be sure you have someone on staff who can fill this role, someone who can convincingly pitch candidates on your company while serving as a positive representative of said company.
If you don’t think anyone on your staff can fill this role, then you may want to hire an external recruiter. They have knowledge when it comes to employer branding and candidate experience, which they can leverage to your benefit.
That said, choosing an external recruiter is not without its risks. External recruiters don’t have the same relationship with the company culture as your internal team does. Therefore, as they’re searching for the right person for your company, they’ll be relying on secondhand reports to assess fit, which can lead to some bad calls from even the best of recruiters.
Which Option Offers the Best Investment?
Hiring external recruiting help is costly, but so is investing in an internal recruitment team. Neither method is a clear winner on price. It’s best to think of recruiting as an investment: It’s not about how much money is spent as much as it’s about where the money goes and what you get for it.
If you run a small or medium-sized company experiencing fast growth, you should consider building out your internal recruitment team. If you’re constantly hiring new employees, it will be more cost-effective in the long term to have an in-house team handling your recruiting.
Keep in mind that building an internal team means more than just hiring the right people for that team — it also means investing in the right tools, like recruitment software, background check services, and so on. No matter how skilled your internal recruiters might be, they need the right equipment if they’re going to exercise those skills to the fullest. Additionally, investing in the right recruiting tools can also keep the recruitment team small and streamlined, as many recruitment tech solutions can automate significant portions of the hiring process today. This saves you money in the long run, and your recruitment tools will also make it easier to manage and monitor all your in-house hiring activities.
If your company isn’t experiencing such significant growth, outsourcing your recruiting might be a better option. Insourcing isn’t necessarily cost-effective when you’re only making occasional hires, especially if your company is a smaller business or startup. Moreover, offloading the task of recruiting to an outside team will allow your employees to focus on their responsibilities that directly impact the growth of the business. The budget and manpower needed to build an internal recruitment team would be better invested in building brand awareness and your customer base.
Additionally, smaller businesses tend to have less specialized roles, which means the ideal candidate profile is more flexible. Therefore, there’s less of a risk that an external recruiter will lack the requisite knowledge to properly evaluate candidates.
If you believe external recruiting is your best bet, you’ll need to pay careful attention to your service-level agreement (SLA) with your recruiting provider. Your SLA is the contract between you and the recruitment agency, and as such, it’s an important tool for controlling spend and ensuring delivery of results. Make sure your SLA articulates all the necessary details, like total cost, time to hire, probation expectations, replacement provisions for new hires who don’t work out, and so on. Without an SLA, there’s no commitment and no security. Worst-case scenario, you could end up spending thousands of dollars without getting a good candidate.
Ultimately, there’s no right or wrong answer when it comes to choosing between insourcing or outsourcing recruitment. It’s all about determining which option will deliver the best outcomes for your company’s particular situation.
No one can tell you where you’re better off spending your budget, but I can leave you with on piece of advice: Like HR is only a small piece of the puzzle that is your whole business, a single hire is only a small piece of the puzzle that is your recruitment strategy. Think about the long term when deciding whether or not to outsource. Where is your business heading? What resources will it need eventually? These are the questions you should ask before making any decisions.
Cassandra Diamantis is the marketing specialist at My Recruitment Plus.