This blog is designed to deliver some great tips for analysing your recruitment costs. Every business owner or hiring manager knows that when it comes to running a business, staff costs contribute to a large % of your department or business overheads, so managing your recruitment costs is critical. To make this easy for you, the team at Recruitment Magic has developed an easy and simple Recruitment Cost Analysis Tool. This is free to download and available to all readers of this blog.
Depending on the size of your business, you may have some spend on jobsites, job boards, job forums. Some may be on an annual contract basis, others may be used on an ad-hoc basis. It is important that you track the cost of this, looking at how much you are spending, how many new hires are coming from this form of advertising and what time it is taking you to manage the jobsite postings from an administration perspective. Are you on the right job boards? Do you need more job boards, but have no additional budget? What do you view as success from your job board partners? You can use our free recruitment cost analysis tool to track this spend (see below).
Print or Radio Adverting
You may also run print based adverts or use other forms of media such as the radio to advertise your jobs. These all come at a cost and as with jobsites, it is important to look at the cost of this advertising. It can be an important part of the employer branding process too to make people aware that you are hiring, that you are bringing new people into the organisation. What do you view as success from your media partners? You can use our free recruitment cost analysis tool to track this spend (see below).
You may also pay for premium listings in job forums or on business networking sites such as LinkedIn. A fantastic place to source candidates, however the premium listing comes at a cost per user and the job adverts within this can also be high. Make sure that you include any premium subscriptions when you are analysing your recruitment costs. You can use our free recruitment cost analysis tool to track this spend (see below).
CV Databases & CV Banks
Some job boards include access to their CV database, others do not, you may be paying to access CV databases where you can source candidates and approach them directly with your job opportunity. This is usually on an annual contract or can be paid for on an ad-hoc basis with limited access for a certain number of days, or in some cases it gets restricted to a certain number of CV views or CV downloads. Unless you are an expert in Boolean string searching using very specific keywords and strings of keywords it can be tricky to source the right people from these sometime expensive CV databases. This cost must also be taken into account when you are analysing your recruitment costs. You can use our free recruitment cost analysis tool to track this spend (see below).
Cost of Recruitment Agencies / Headhunters
The typical cost of recruitment agencies is between 12% and 20% of salary per head. This will depend on the type of role and the level of candidate being hired. This will typically be one of the higher costs of recruitment within all of the costs that need to be analysed. Using a recruitment agency can be expensive, although an great agency will remove a lot of the time and hassle from the client in relation to administration by only submitting candidates who are a match to the position. If you are using agencies then always have a way to measure their effectiveness and quality, we recently wrote about this in another blog which you can read here. Make sure that you know how much your agencies are charging you and keep a track on your spend in this area. You can use our free recruitment cost analysis tool to track this spend (see below).
Cost of Job Fairs
Depending on the size of your organisation you may be using Job Fairs once or twice a year to recruit candidates in volume. The costs related to job fairs must include, cost of stand rental to the exhibition organiser, cost of printing materials to give out on the day, cost of exhibition stands, pop-up banners and other branding for the area you will occupy. In addition you will have costs of transportation, cost of travel for members of your team to attend and potentially overnight stays. You can use our free recruitment cost analysis tool to track this spend (see below).
Salaries of In-House Recruitment Team or HR
In a larger organisation you may have a dedicated Recruiter or team or Recruiters, their salaries need to be included in your recruitment costs when you are analysing the real cost of recruitment. Even if you do not have a dedicated team, you need to include a % of the salary of the person responsible for hiring relative to how much of their time is spent on the recruitment process. In a small business that might be the business owner, but even so every minute spent on recruitment is a cost to the business because it takes you away from the main role you have which is to grow your business. You can use our free recruitment cost analysis tool to track this spend (see below).
Applicant Tracking Systems
This cost will only be relevant to larger companies, ATS can be a significant cost to the business and usually this is charged on a monthly basis or on an annual contract basis with renewal and support costs. Look at whether your company is using an ATS and if so include this in your cost analysis. You can use our free recruitment cost analysis tool to track this spend (see below).
Employee Referral Scheme
Some larger companies offer an Employee Referral Scheme where existing employees are asked to refer potential new recruits to the organisation. This comes with a bonus for the existing employee for making the introduction, usually monetary based. There is a cost associated with this. If you currently use this as an approach to your recruitment the costs needs to be tracked and measured. You can use our free recruitment cost analysis tool to track this spend (see below).
Telephone Costs & Other Recruitment Expenses
It makes sense to conduct telephone pre-screening interviews with candidates. This helps to build a shortlist of candidates that you can then bring in for interview. The phone costs associated with this must be taken into account. A typical phone screen would last around 20 minutes so multiply this by the number of phone screens each year and the phone costs soon begin to climb. Consider using Skpye or Google Hangouts for your interviews to help you reduce costs in this area.
When people are brought in for a face to face interview there may be other expenses involved such as venue costs if the interviews are to be held off site and travel expenses for the team or person that goes to the interviews. If any candidates are based outside of the country where the position is being recruited then there may be travel costs involved to bring the shortlisted candidate(s) in for a final round interview.
The Hidden Cost of Recruitment Administration
Recruitment takes time. Whether you have an in-house recruitment or HR team or not, someone in your organisation is responsible for hiring and that process can be lengthy and very time consuming. Regardless of how large or small your company is, the administration involved in recruitment can cost a huge amount of time and money.
From writing the job description, posting the job, managing incoming applications, manually screening candidates, replying to emails, inviting candidates for interview, going through a thorough interview process of up to 3 rounds and then reference checking, making the offer and then finally rejecting those who were unsuccessful, you can guarantee it will take hours and hours of time.
What is the cost to the business of all of this time? If you work on the basis that an hour lost to recruitment administration is at a cost of €100 or $100 or £100 then you can start to work out exactly how much time recruitment costs the business. It isn’t always the physical spend. You can use our free recruitment cost analysis tool to track this spend (see below).
How Can I Analyse My Costs?
To make things easy for you, Recruitment Magic has devised a ‘Recruitment Cost Analysis Tool’ to help you track and measure your current spend on recruitment. As a low cost recruitment provider we help companies to reduce both their time spend and their actual spend in the recruitment space.
We are now providing clients with recommendations on how they can reduce their cost of recruitment using low cost packages, outsourcing the administration and scaling up the number of jobsites and CV databases they are able to access. If you would like to talk to our team we are offering FREE audits of your recruitment. Just send us your completed spreadsheet to firstname.lastname@example.org and we will show you how you can reduce your costs by 75% or more and your time spend by up to 90%.
You can download your FREE recruitment cost analysis tool here: