11 Ways to Contain Recruitment Costs

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lionTalent acquisition is a major part of any organization’s overall costs. It is money well spent when companies are starting to (once again) compete for talent, but not every company has the resources to spend a great deal of money. Containing recruitment costs is something that talent acquisition and management pros frequently have to consider over the course of their career: during a merger or acquisition, when taking a new position within an organization, during budget cutbacks and when under new management. What steps should a talent acquisition manager take to contain recruitment costs without sacrificing the talent pipeline?

A special thank you goes out this month’s Leadership Sponsors: Zoho and TheLadders. Please visit their sites to understand how these quality services can elevate your recruitment practices.

ladders1. Assess recruitment costs: You need to find out how much recruitment is actually costing your organization before you can determine what needs to be eliminated or reduced. Figure in both direct and indirect costs when assessing your recruitment costs. Examples of direct costs include: turnover, HR Administration, job board fees, agency and advertising budgets, onboarding budget and processing costs. Examples of indirect costs can include loss of business while the position is vacant, additional training costs, reduced output and other things that while important, can be difficult to quantify accurately. However, it is important to keep records to create a paper trail around not just the costs of recruitment but the value that recruitment brings to the organization. Suzanne Lucas forces us to examine the hidden recruitment costs: Interviewing costs. If you have to pay travel expenses, that’s costly. But if all your candidates are local, you still have to take the time to go through resumes, talk with numerous people, do formal interviews (which take an inordinate amount of time), talk with colleagues, and figure out who is the best employee.

2. Think short-term in nature: Yes, implementing an entirely new ATS or HRIS is likely to save money in the long-run, but a system wide move should only be made if your system is genuinely broken, because the costs will skyrocket before they start looking like savings from the top down. Instead, look to modify your system so that additional users can access the data. Self-service puts the onus on hiring managers to assist in collaboration and create a more consistent (and faster-moving) system. “You want to maximize the time-consuming hiring process by having 80% or more of candidates accept your offers. Hopefully the recruiter and hiring manager are laying the groundwork for an offer from the get go and properly selling the candidate,” said Joe Trammel in a recent Forbes column.


3. Automate what you can: Reporting is a necessary evil from multiple viewpoints. Most notably in this case, it takes time and budget that could best be allocated elsewhere. Try reporting on demand features that reduces administrative burden on those who would rather spend their time recruiting. While this doesn’t reduce hard costs, it does make the most of resources you already have in-house. Expect a small dip in productivity while moving your staff to reporting automation from spreadsheets. Examples of things you can automate: post application messaging, nurturing workflows, social messaging, FAQs, and automated help desk messages.

4. Get some screen time: Screening is one of the most underused tools in a recruiting arsenal. Today’s technology playing field has created a landscape where candidates can be assessed at the push of a button and recruiters can easily share, scale and customize multiple assessments based on the position, vertical, candidate needs and timeline. Building pre-screening into your recruiting process will assure that you recruiting team is spending their time actually recruiting.

5. Build out social: Social recruiting is not just a fad, it’s also a remarkably inexpensive way to extend your employer brand, employee referral program and sourcing functions, all areas where many HR departments feel they could use extra help and save money. Try selecting one social recruiting avenue (the one where your applicants are most likely to be) and excelling there. While there are costs to recruiting via social media, over 73% of companies have made a successful hire via these channels and the numbers continue to grow as more organizations adopt these methods.

6. Reduce time to hire: Let’s face it, when you reduce time to hire, you reduce the cost per hire (in theory). Focusing on reducing time to hire can also create a much better candidate experience as well. How can you reduce time to hire? By agreeing on the job ad or description before it goes out the door, use technologies like video interviewing, consolidate first round and assessment interviews, and have managers assist in the hiring process earlier on.

7. Use marketing tactics: Marketing was built on the foundation of reaching multiple people at once. Recruiting can use these tactics to reach multiple people and nurture candidates throughout the application process, without actually having to nurture them. Marketing automation makes it possible to reach out to multiple candidates simultaneously and stay in touch with non right-fit candidates. “The key to creating a recruiting pipeline is to parallel what you already know about creating a successful sales pipeline.”

8. Hire smart the first time: Reducing time to hire is important but a call for recruiting to focus more on retention has been made and for many, the call is a good one. After all, in reducing our recruitment costs we must look at retention. Recruitment teams are increasingly being asked to include retention metrics in their reporting precisely because it is so important to keeping costs low. With the price of each lost employee slated running as high as 150 percent of annual salary, increasing on retention can assist in containing recruitment costs. According to Paul Slezak at RecruitLoop: “Thousands of dollars per year can be drained from your budget with low staff retention rates. The costs don’t just come from direct expenses associated with hiring a new person but also in the loss of productivity around the resignation, rehiring and retraining processes.”

9. Zero in on compensation: Think keeping your offer costs low is saving you money? Not unless you are looking at your offer to acceptance rate. If you are wasting man hours and frustrating your recruiting staff by offering less than market value, you are wasting time and money. Adding flexibility into your compensation ranges may increase offer to acceptance and allow your recruiters to nab their first choice every time (which may reduce time to hire and increase retention respectively).

10. Pursue innovative solutions: Don’t think you need job boards? Optimize and examine your spend and look for alternatives within talent communities, employee referrals or other more ‘organic’ programs. Don’t continue to spend on products because they were there when you started. Assess precisely who is the star in your ‘source of hire’ report.

11. Boost your employee referral program: Study after study shows that employee referrals are among the most qualified, most quickly hired and the most easily retained candidates overall. Why not double down on your employee referral program or integrate ERP with your other recruiting initiatives (like social)? A 2010 CareerBuilder survey found that 48 percent of those surveyed said cash bonuses would further motivate them to participate in their company’s employee referral program.

“At most companies, people spend 2% of their time recruiting and 75% managing their recruiting mistakes.” Richard Fairbank, CEO at Capital One. While this may not be entirely accurate in your organization, it’s key to note that executives are paying attention to recruiting. How are you optimizing this process to ensure you are keeping costs low and creating true value? By using recruitment cost containment ideas like those listed above, you will not only save your organization money but create additional efficiencies and value within your recruiting function.

A special thank you goes out this month’s Leadership Sponsors: Zoho and TheLadders. Please visit their sites to understand how these quality services can elevate your recruitment practices.


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Maren Hogan is a seasoned marketer and community builder in the HR and Recruiting industry. She leads Red Branch Media, an agency offering marketing strategy and content development. A consistent advocate of next generation marketing techniques, Hogan has built successful online communities, deployed brand strategies in both the B2B and B2C sectors, and been a prolific contributor of thought leadership in the global recruitment and talent space. Hogan speaks and writes on all career and workforce related subjects. Her clients include Fortune 500 companies and SMBs around the globe. Red Branch Media was formed in 2006 as a simple consultancy. Today, the firm is a full-service B2B Marketing Agency that serves clients in the U.K., Africa, China, Israel, Europe and North America. Primarily focused on the Human Resources and Global Workforce vendors, Red Branch Media handles clients of all shapes and sizes.
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