How to Optimise Recruitment Costs? 8 Effective Ways You Should Consider

Are you overspending on hiring? Our simple tips will assist you in lowering your cost per hire.

Unfortunately, no new hire is free, but there are techniques you can use to optimise your uncontrollable hiring costs.

Before we get into how to save money, consider what you're currently spending and how you're spending it. The cost of hiring a new team member varies greatly depending on how that cost is calculated. When you factor in the onboarding period - the time it takes a new hire to get up to full working speed - the average cost of having to replace a single employee could be as high as £30,000, according to Oxford Economics research.

When calculating hiring costs, most organisations will concentrate on important areas such as recruitment company fees, referral fees, and advertising charges. And be aware that these expenses will vary depending on the type of position you are recruiting for.

We're sure we can all agree that cost savings are a good thing but knowing what you should and how to do it are two entirely different things.

Fear not, we've compiled a list of actionable ways to cut recruitment costs in 2022:

8 Ways to Optimise Your Recruitment Costs

Optimise Cost Per Hire

The cost per hire is the mean amount of money spent on a hire. This metric is useful when developing or monitoring your recruiting budget. For instance, if you expect to hire 100 people in a year at a cost of $4,000 per hire, you can budget $400,000 for recruiting. You can spot any significant changes in an annual cost per hire by comparing annual cost per hire over several years.

Cost per hire would include everything it takes to fill a job opening, including advertising costs, software fees, candidate travel costs (for interviews conducted), relocation charges, administrative costs (in-house or hired), and other expenses associated.

CPH (Cost Per Hire) Calculation

To determine whether your cost management is effective, we must consider all the factors that contribute to the cost per hire. Looking at each element separately can help you identify any areas for improvement and determine the most affordable price.

 

Now it is important to understand what internal and external recruitment costs, so let's take a look at them.

Internal Recruitment Cost

Internal recruitment occurs when a company seeks to fill positions with current employees by procuring talent from other teams, departments, and job functions within the company. This process is also known as and allows teams to fill skill gaps proactively.

Internal recruiting costs are expenses associated with internal staff and the recruitment function's organisational costs. These are some examples:

1) Salaries for recruiters

2) Employee referral incentives

3) Interview expenses (number of hours x hourly wage of the interviewer or hiring manager)

4) Fixed expenses include physical infrastructure (e.g., office rental)

External Recruitment Cost

External recruitment occurs when a company hires candidates who are not currently employed by the company. External recruitment is a time-consuming process in which companies must post job descriptions on various job boards, create and engage with a talent pool, improve employer branding, and so on.

External recruiting costs are expenses related to outside vendors or out-of-office expenses, such as:

1) Agency commissions

2) Advertising expenses (e.g., job boards)

3) The cost of technology (e.g., recruiting software)

4) Costs of a career fair or recruiting event

External recruiting expenses can also include candidate-related expenses like:

1) Travel expenses

2) Costs of relocation

3) Sign-up incentives

Leveraging Employee Referrals

Employee referral is among the most dependable and cost-effective recruiting methods. It is a hiring method in which the startup shares job opening information with its employees, along with a referral link where they can upload resumes of candidates they know. When the candidates they refer are hired, the employees are usually rewarded with gift cards or bonuses.

HR software allows startups to run referral campaigns for free, making it the best way to attract more candidates while lowering recruitment costs.

Always ask your current employees if they know anyone who would be a good fit for an open position. This is the quickest way to reduce time-to-hire because it eliminates the need for a search and jumps straight to the interview stage. Encourage staff to share one's job postings and offer incentives for bringing in quality candidates to help increase excitement about bringing on new people.

Advantages:

1) Current employees are familiar with your company's requirements.

2) You can save both time and money.

3) Can boost employee engagement.

Develop Your Training Offering

Progression is one of the major factors determining candidate decision-making, but it is often overlooked by HR professionals and other business leaders. Indeed, studies have shown that career advancement is the number one reason employees leave their jobs.

Employee retention is likely to suffer if you do not provide exceptional training and development.

Investing in training is an obvious way to improve and reduce recruitment costs. You could hire a full-time in-house trainer, or you could invest in outside training or online learning platforms. You must send a message to your employees that you value them, or they will find someone who will.

Automate Hiring Process

While using an external recruitment agency may appear to be less expensive in the short term, it ultimately costs much more than having an in-house recruitment team. However, not every startup has the resources to hire a large team of recruiters, which is why HR software is useful for startups in this situation.

HR software facilitates the selection of automation for routine but critical HR processes such as:

1) Recruiting candidates

2) Screening of resumes

3) Scheduling interviews

4) Management of offers

And a lot more. While each of the aforementioned processes is critical, they can also be done automatically and optimised at a low cost.

HR software also excludes the need to pay an outside agency to perform these tasks, lowering your recruitment costs significantly.

Finding the best talent while keeping costs to a minimum can be difficult. But this does not have to be the case. You can improve your hiring system by finding more efficient methods. It all starts with measuring the right metrics, and one of them is CPH.

Schedule Online Interviews

While meeting a candidate in person was once required, the pandemic has changed that perception. Startups all over the world have begun to hire remotely, and scheduling interviews online eliminates the logistical costs associated with in-person interviews.

Interview scheduling can also be digitalized to eliminate confusion and the time required to agree on an appropriate time.

HR software not only does this, but it also allows quick access to applicant information during interviews, making the recruitment process more efficient and lowering recruitment costs.

Source Candidates On Social Media

One of the most effective tools for achieving this goal is to use social media platforms such as Instagram and Facebook.

Which channels you choose will depend on your industry and the demographic trends of your employee personas, but social media sites are currently some of the best options for engaging with both active and passive candidates—because billions of people use these sites every day, whether they're looking for work or not.

Traditional job boards, on the other hand, only attract 20% of candidates who are actively looking for work at any given time.

Facebook, for example, allows companies to post and promote positions available directly on their company page. Twitter or Snapchat ads can help highlight company culture and encourage talent to apply for jobs directly from their phone. Furthermore, using these channels to source talent allows you to attract higher qualified people because followers of your brand's profiles are likely to already be interested in your industry and have a strong understanding of your company culture.

Metrics

The best way to optimise your recruitment cost is to first understand what it is and how it changes over time. Not only that, but it's critical to monitor related metrics such as time to hire, overall applications, cumulative ad impressions and clicks, attrition rate, and apply rate, as well as employer branding metrics such as social media engagement and impressions.

In this manner, you can begin to assess a) whether or not you have a problem; b) where the problem may be occurring in the funnel; and c) how you might go about correcting the situation.

At the end of the day, no matter what approach you take to lowering your recruitment costs, your success will be determined by your ability to comprehend the impact of each stage of your recruitment funnel.