According to a study conducted by the Society for Human Resource Management, the average cost per hire is around 4,700 dollars for regular roles. Meanwhile, executive hires cost companies around $28,000 per position.¹ With these costs in mind, it’s easy to understand how challenging recruitment can be.
On top of being pricey, traditional in-house recruiting takes up valuable time for your HR professionals. What can leaders do for faster and cost-efficient hiring? The best solution is to partner with a staffing agency.
The Hidden Costs of Traditional Hiring
When employers calculate hiring expenses, many focus solely on the obvious costs like salaries and benefits. However, the true cost of hiring covers a much broader range of expenses that can significantly impact your company’s bottom line. It includes two aspects: direct and indirect costs.
What Are the Direct Costs of Hiring?
Direct costs start with job advertising and recruitment platforms. Companies usually maintain multiple job board subscriptions to advertise their open roles. They purchase subscriptions to post premium listings on sites like LinkedIn, Indeed, and industry-specific websites. This alone can already cost a business thousands of dollars annually.
These expenses compound when positions need to be reposted or when hiring across multiple roles. Aside from attracting candidates, the entire recruitment cycle also requires direct investment. From screening processes to onboarding investments, employers may underestimate the amount needed to hire high-quality professionals.
New hire orientation programs, training materials, software licenses, and even the time spent by existing employees mentoring new staff all represent significant financial investments.
What Are the Indirect Costs in Recruitment?
While less visible, the indirect costs of hiring often exceed direct expenses in their financial impact. Lost productivity during vacancy periods is particularly costly, especially for critical roles. When positions remain unfilled, existing team members need to take on additional responsibilities. This can potentially lead to overtime costs, burnout, and decreased overall productivity.
An extended interview process also creates indirect costs through the time investment required from hiring managers and HR personnel. Multiple rounds of interviews, scheduling coordination, and candidate evaluation pull key employees away from their primary responsibilities. If prolonged, this can greatly impact organizational productivity and efficiency.
Even after data-driven recruitment, there are still chances for your people to hire unfit individuals.
When your recruitment methods yield bad hires:
- Both your finances and team morale take a hit
- You might lose investments made during hiring
- You risk having service issues or low-quality products
- You end up restarting the entire hiring process from scratch
Read more: The Metrics That Matter: How to Measure Success in Recruitment
Drive Effective and Cost-Efficient Hiring with a Staffing Partner
The combined costs of direct and indirect investments can make traditional hiring challenging. This is especially true for businesses that aren’t equipped with the right hiring strategies and talent pipeline.
To ensure that your recruitment strategy can drive effective and cost-efficient hiring, consider partnering with a trusted staffing agency like Hughes Recruiting & Consulting. With their expertise and combined industry knowledge, they can create the following benefits for your business:
1. Streamlined Recruitment Process
A streamlined recruitment process transforms hiring from a lengthy, disorganized process into a smooth, efficient operation. Staffing agencies achieve this by implementing proven workflows that eliminate common bottlenecks.
Their recruiters are trained to handle multiple stages simultaneously. For example, they can screen new applicants while they schedule interviews for qualified candidates and conduct reference checks for finalists. They use standardized assessments to quickly identify top matches for your open roles.
Moreover, they conduct regular client check-ins and feedback loops with both clients and candidates. This ensures that their decisions are aligned with hiring priorities and can result in quality hires. By streamlining the hiring process, companies can witness shorter time-to-hire and better cultural fit.
2. Advanced Technology Infrastructure
Infrastructure is a significant competitive advantage that staffing firms provide for their clients. Most agencies invest hundreds of thousands in sophisticated recruitment platforms that individual companies would find difficult to justify purchasing.
This technology stack typically includes:
- AI-powered candidate matching algorithms that can screen thousands of resumes against job requirements
- Video interviewing platforms that allow for convenient candidate screening
- Skills assessment tools that verify technical capabilities
- Comprehensive applicant tracking systems that manage the entire recruitment workflow
These systems integrate with one another to create a seamless hiring process. The technology also provides valuable analytics and reporting capabilities that help optimize recruitment strategies over time. By simply choosing the right staffing partner, you can enjoy all the benefits of these cutting-edge tools without having to make costly purchases.
Read more: Smart Hiring: How to Use AI to Get the Best Candidate
3. Established Talent Networks
Staffing companies are well-known for their wide talent pools. They can provide you with instant access to a network of qualified and pre-vetted professionals built over years of operations. These databases are filled with both active and passive job seekers, giving you more chances to find the right talent.
Other actions taken by agencies:
- Regularly engage with their network through career development discussions and market updates
- Track candidates’ career progression and note when top performers might be open to new opportunities
- Maintain detailed profiles of their skills and preferences
This effort to actively maintain relationships makes it easier for recruitment agencies to place people in job roles that suit their capabilities.
When a new position opens, agencies can immediately tap into this network to identify suitable candidates who are already familiar with their process. This dramatically reduces the time and effort you’ll need to create pipelines or train new hires.
4. Minimized Cost for Administrative Tasks
Staffing agencies are used to handling high-volume hiring. They are also experienced in negotiating rates for services like background checks, drug screenings, and skills assessments. For your company, this means less direct costs related to vetting professionals who show interest in your positions.
They are skilled in managing payroll, benefits administration, and employment paperwork. Their expertise in these areas means tasks are completed quickly and accurately. This leads to a reduced chance of errors or costly corrections.
Many agencies also offer value-added services like onboarding support and compliance monitoring. By leveraging their bulk purchasing power and operational efficiency, agencies can often provide these services at a lower cost than companies could achieve internally.
5. Flexible Options for Workforce Solutions
Instead of relying solely on permanent hires, working with staffing firms can give you access to different workforce solutions.
Depending on your needs, your chosen partner can offer you contract-to-hire or temporary employees. They can rapidly scale your workforce levels up or down based on:
- Seasonal demands
- Project requirements
- Business fluctuations
This flexibility extends to offering different engagement models. For example, they may suggest:
- Temporary staffing for immediate needs
- Temp-to-hire for evaluating potential permanent employees
- Direct hire for critical permanent positions
This range of options allows your business to optimize workforce costs while maintaining operational efficiency.
Read more: The Inside Scoop on Temp Work: Hiring Hacks You Should Know
6. Lower Chances of Hiring Risks
Aside from striving for positive candidate experience, staffing agencies are compliance experts. Staying current with employment laws and regulations is part of their normal processes.
A recruitment agency is trained to handle:
- Worker classification
- Proper documentation
- Insurance coverage for their placements
Their thorough screening processes, which often include behavioral assessments and cultural fit evaluations, help reduce the likelihood of poor matches.
In the event of an unfit match, many agencies offer replacement guarantees. This is an example of the financial protection you can enjoy when partnered with a staffing agency.
By keeping documents of all hiring decisions and processes, a staffing firm can help protect you against legal challenges that may occur during the talent acquisition process. In case of a compliance issue, you’ll only have to worry about recruitment costs rather than unexpected legal fines.
Read more: How HR Managers Can Stay Updated on Employment Laws
7. Improved Employer Branding
Think of a staffing company as your brand ambassador. They communicate your value propositions to potential candidates. They also maintain professional communication throughout the hiring process by providing timely feedback. This ensures candidates have a positive experience regardless of the outcome.
Agencies can also help you develop and articulate your employer value proposition (EVP). They can guide you in highlighting the unique benefits and growth opportunities candidates can experience with you.
This professional approach to candidate engagement helps you build a strong employer brand. In turn, this can help you attract top talent and enhance your company’s reputation in the industry.
Choose the right partner for the best outcomes.
The benefits of hiring with staffing firms create a strategic advantage for your business. With Hughes Recruiting & Consulting, you can enjoy lasting connections at lower costs. Our experts can help provide unique solutions to fill your workforce with top-notch professionals.
Interested in learning more? Contact us today!
Reference
- Navarra, Katie. “The Real Cost of Recruitment.” SHRM, 11 Apr. 2022, www.shrm.org/mena/topics-tools/news/talent-acquisition/real-costs-recruitment.
