There are a number of elements which go into the process, planning and recruitment of new staff.
As a hiring manager, your company or department may require you to outline various costs associated with this task.
Whilst the financial cost is important, there are several additional costs to consider when planning for your recruitment cost effectively:
This is the recruitment cost that is typically top of mind. HR salaries along with any extra staff who will contribute to the hiring process, additional internal commissions or referral bonuses, and advertising and job posting costs.
You may also need to factor in the monetary investment into software dedicated to pre-screen, track and manage applicants, software related to any relevant aptitude tests or background checks, and the cost of recruitment events or job fairs your company partakes in.
Time invested by staff during the hiring phase
Whilst you may already have allocated a certain financial cost, as outlined above, it is easy to underestimate the time it takes to ensure your job description highlights the skills and qualities you are looking for in your ideal candidate. Without a clearly defined role and expectations, you may find yourself reviewing irrelevant resumes or interviewing candidates who don’t actually fit your requirements.
Time is also a factor when you consider the amount of time HR is investing into recruitment that is also needed for other HR functions, resulting in lower productivity and profitability.
The time it takes to hire staff
You may have set expectations on how long you will ideally spend on hiring, but have you considered this as a recruitment cost?
During the time you are hiring, there is either no productivity in the role you are hiring for, or limited productivity through the previous worker or another staff member covering the tasks.
If the hiring process takes longer than usual, this extends the lost productivity time and output for your company.
Filtering applicants: reviewing resumes, interviewing and negotiating
Depending on how many resumes you receive for a role, it may take a considerable time to filter through the various applicants and their levels of experience and skills.
Often resumes are glossy versions of a candidate’s work history and can oversell the candidate too. This is why more and more companies are choosing to do pre-screening activities such as solving problems, answering behavioural questions, and personality assessments before the interview stage in order to save time and filter down the number of applicants.
However, not only is the software to do this a financial cost, it can be a massive undertaking, especially in smaller teams and organisations, and consume a lot of HR’s time.
When you do finally reach the decision to hire someone, the negotiation stage can draw out the process longer, leading to more HR wages allocated to the hire, and productivity and output lost in the role you are hiring for.
Employee training and integration
Cultural “fit” and workplace integration is another consideration.
Whilst there are unavoidable set-up costs such as organising computers, software, desks and company training that you need to do for the new hire, your candidate may need additional skills training or certifications which can cost your company financially, as well as in lost productivity while you get your new hire up to speed.
If a new hire needs more time to integrate into the company’s culture and way of working, this can also result in lost productivity from both the new employee and the HR staff members managing their transition.
If your hiring phase is planned and executed correctly, you are more likely to choose the right person, ensuring that it is an easier transition for the incoming employee and current staff, meaning that it will cost your company less in the long run.
The recruitment cost of “Bad” hires
Worse than a new hire who doesn’t quite “fit” is a bad hire. That is, one that just doesn’t work out and either leaves the company, or is forced to leave.
This will not only mean having to start the hiring process again, but it can also lead to less productivity amongst remaining staff, lower employee morale, and put existing projects put on hold. The recruitment cost associated with this can be profound.
Many companies are looking to outsource the hiring process to recruitment agencies to avoid all of the above costs. Generally speaking, recruitment agencies have an advantage over in-house recruitment due to more industry networks, contacts, databases, and manpower invested.
Whether or not you choose to recruit in-house or through an agency, be sure to factor in the extra time, energy and effort outside of the financial recruitment cost.
If you feel that your recruitment cost breakdown could be improved, contact us for help recruiting the ideal candidate for your team within your budget.
Learn from Robert Half’s expert recruiters so you can build a talented team of employees or advance your career. Operating in over 300 locations worldwide including Melbourne, our job agencies can provide you with assistance where and when you need it.