How Hiring a Recruiter Actually Saves You Money
Working with a recruiter saves you both time and money throughout your hiring process.
It sounds like just another sales pitch, right? But is it true? These days, everyone is looking for more cost-effective ways to manage their business, and some employers may wonder if outsourcing recruitment is an unnecessary expense. What can a staffing agency do that you can't? Won't it be cheaper to fill your open positions yourself? In fact, a good recruiter can save you both time AND money, and in more ways than you think. Although they may not show up as quantifiable items in your accounts, the savings are real when you consider all of the relevant factors and the real cost of hiring on your own.
Cost of Job Ads
If you've ever paid to post an ad on a job board, you know how expensive it can be. If you use more than one job board, need to repost an ad frequently, or if a position proves difficult to fill, these costs add up even faster. The price of ads can quickly rise into the thousands of dollars, especially when you add premium features to boost your visibility. Unfortunately, no matter how much you spend to get more impressions for your ad, there is no guarantee it will attract the perfect candidate. Additionally, some ads can produce hundreds of applicants, many of them unqualified for the position, and it will require considerable time spent by your overwhelmed hiring manager to screen them all.
Recruiters are experts in quickly assessing resumes and identifying the most qualified candidates. They always have multiple ads posted, and while not all candidates will be a good fit for the role they applied to, they may be better suited for other positions, including yours! Having better and more varied ads increases the likelihood that the right candidate will apply, even if they don't apply specifically to the ad the recruiter posted for you. Recruiters also understand how to get the best results from job boards, which are a source of frustration for many employers.
Tap in to a Hidden Market of Candidates
While recruiters have the expertise to make the most of job boards, they don't rely on them exclusively to find top talent. Recruiters use their expertise and tools to find both active and passive candidates. Passive candidates are professionals who are not actively seeking, so they won't see your job posting, no matter how many job boards you post it on. However, they will be open to making a move for the right opportunity. Often, these include the most skilled and highly sought-after candidates, and the best recruiters will have an extensive professional network of these individuals. In fact, around 73% of candidates consider themselves to be passive job seekers, so employers who restrict their hiring strategy to job boards could miss out on almost three-quarters of the potential candidate market.
The Monetary Value of Time
How much is your time worth? What about your employees' time? Consider how much you pay for each hour of your employees' time and how their work leads to company profits, whether directly or indirectly. Effective recruiting is a full-time job, but many companies don't have the budget to employ an in-house recruiter, which will cost you around $50k+ in annual salary in addition to benefits. That means all of those recruiting tasks fall on one or several employees who are being taken away from their usual work to do the job of a recruiter, often with little or no training. Every hour they spend recruiting costs your company an hour of productivity. All this extra work gives them less time to get their regular jobs done, causing important tasks to either fall on their coworkers or not get done at all.
Employees who are not staffing professionals will usually lack the training, tools, and experience that a recruiter has, which means they will likely spend more time to achieve the same results as a professional recruiter. Recruiters have the added advantage of industry tools and expertise, which enable them to find and vet candidates more quickly and efficiently than most hiring managers. Considerable time must be spent writing and maintaining job board ads, reviewing resumes, prescreening, scheduling, and interviewing candidates, negotiating offers, and rejecting applicants, and the longer a job stays open, the higher the cost to the company. The price of lost productivity can be immense for both hiring managers called away from their other job responsibilities as well as those picking up the slack. Outsourcing recruiting allows your team to save time and focus on projects that increase company profit and keep your business moving and growing.
Working with a recruiter puts not one, but an entire team of hiring professionals on your job. Because of their experience and resources, they are more likely to fill an open position faster than you would on your own, and that can translate into significant savings for you. For one thing, a slow hiring process can cause you to lose high-quality candidates who accept other positions while you’re still reviewing resumes. Additionally, having a position open for an extended period of time is costly, and not just because of ad costs. You may think you're saving money because you're not paying a salary for an empty seat, but, in fact, the cost of vacancy (COV) can well outweigh the cost of the unpaid salary. You can get an idea of this cost by doing some simple calculations.
First, estimate the lost revenue from the missing position. Divide the annual company revenue by the number of employees and divide the result by 260 (the number of working days per year). This will give you daily employee revenue.
Most employees produce company revenue between 1x and 3x their salary, so, based on the position, multiply the average daily employee revenue by 1, 2, or 3.
This is how much revenue you are losing every day the position is vacant. Finish your calculation by multiplying your result by the estimated time it takes to fill the role. This is the approximate revenue lost during the time the job was vacant.
((Annual company revenue / # of employees) / 260) X productivity (1, 2, or 3) = Daily employee revenue
Here is an example of the math. If you have annual revenue of $10 million, 25 employees, and a vacant sales position with a $100k annual salary (which would be considered a level 3 or highest revenue production position), it is costing your company $4,615 each day that position is vacant.
(($10mil / 25) / 260)*3 = 4615.38
That’s about $23,075 a week and $92,300 a month! You can see how a position that is vacant for a few months can quickly have a major impact on revenue. Yes, you saved some money on salary and benefits during that same time period, but you only saved a third of what you lost.
Of course, these calculations are estimates, but it's easy to see how rapidly vacancy costs pile up and how substantial the impact can be on your company's bottom line. The cost of your current staff is more difficult to measure. The missing team member’s work will have to be picked up by other employees, which may mean increased overtime costs to ensure the work gets done and/or decreased quality and efficiency if team members are required to assist with work that is outside their area of expertise. As a result of these coverage issues, long vacancies often result in higher burnout rates and lower productivity as remaining employees struggle to keep up with both their regular job duties and those of the missing team member. If your team starts to get overwhelmed, quality or service standards are likely to deteriorate, which will negatively impact customers and damage your company’s reputation. Additionally, a department that is already stretched thin will have to turn down new projects and opportunities. Eventually, employee morale will suffer, resulting in more turnover and additional open roles with all of their associated expenses.
Help You Find Coverage for Vacant Roles
If you want to make sure the work gets done and your employees don't get overwhelmed while you look for your new hire, recruiters can also provide temporary staffing services. Temp employees can step in to shoulder the extra burden and make sure your business keeps running smoothly. Since they are employed by the staffing agency, you don't have to worry about the usual costs of employment and can easily end the assignment when the role is filled. The temp employee may even prove to be a great permanent fit for the role! Using a recruiter for temporary or temp-to-hire staffing solutions is a great way to keep business running smoothly during a transitional period.
Hire Faster, Hire Better
Factors such as job title, location, pay rate, hard-to-find skill sets, and job market variability can make some positions difficult to fill, even for recruiters. However, for most positions, a recruiter will usually be able to find better candidates more quickly than you would find on your own. This is because they have access to a much larger pool of candidates than most companies and are hiring experts with the skills and experience to quickly identify the best match for your needs. Good recruiters have established relationships with highly qualified candidates and have a list of people to contact as soon as your job order comes in. Using the right recruiter is important, so choose one that specializes in your industry so they have the technical expertise to effectively vet candidates. For example, a technical recruiter will know the right questions to ask network developer applicants, while an HR professional may struggle to accurately assess a skillset that is beyond their expertise. Getting the right candidates quickly will improve and speed up the hiring process, avoiding long gaps of missed productivity.
Avoid Common Hiring Process Mistakes
Professional recruiters are trained experts in all aspects of recruiting. This makes them an invaluable resource for any hiring manager. Not only do they have their finger on the pulse of the job market, but they also know how to avoid common hiring mistakes. For example, some companies have a lengthy hiring process, including assessments, skill tests, and multiple interviews. These long processes can often discourage even quality candidates, who may give up or get another offer. A good recruiter will help you streamline your screening and interview process to help you hire faster and attract strong candidates without losing them to competitors. They can also advise you if your salary range is not competitive or if you need to consider offering other benefits to attract top talent.
Another common hiring mistake is communication failure. If a candidate doesn't hear back from you after an interview, they may assume you're not interested and move on to another opportunity. A recruiter can help by keeping the lines of communication open so that candidates feel valued and respected throughout the process. They can warn you when a candidate is likely to move on and help you understand what the candidate is looking for in a job offer. This crucial information will tell you what you need to include in an offer for it to be accepted and when it's time to move on if you and the candidate aren't going to be able to agree on terms. A recruiter can help you avoid a time-consuming negotiation process and prevent you from wasting time with an offer that will likely be rejected.
Insurance for a Bad Hire
When making a permanent hire, there is always some risk that the candidate may not work out in the long run. If this happens, you will have to start the hiring process all over again and incur all of the associated costs. At least some of these costs can be offset when you hire through a recruiter. Most professional recruiters offer some form of guarantee on their placements, which means that if the candidate does not work out within a certain period of time, the recruiter may replace them free of charge. This protects you from the financial losses associated with bad new hires and gives you peace of mind that you have someone looking out for your best interests.
It's FREE to Try Outsourcing Your Staffing
If you're not sure working with a recruiter is the right choice for your business, don't worry-- many recruiters are commission-based, so there's cost to trying out their services! Contact our recruiters about your open positions and let them start working. They'll send you resumes for the best candidates they find based on your qualifications and job requirements. Give feedback on what you like and don't like about the candidates so they can hone their search. If you don't choose to hire any of the candidates they send, you owe nothing. There is no risk to giving our recruiters a chance to help you fill your next position.
Conclusion
So, can working with a recruiter really save you money? Absolutely! Helping you hire faster, providing expertise to avoid costly mistakes, and allowing your employees to get back to doing the work that moves your business forward-- these are just a few of the reasons why a good recruiter can be an invaluable asset to your company. Building a strong partnership with a recruiter is the best way to help you fill your positions fast and with the best candidates. Do the math and see how a recruiting agency like redShift Recruiting can help you save money AND grow your business.
