In an increasingly digital world, technology functions as an equalizer. Technology that is considered avant garde today becomes the norm tomorrow. In such an environment, experts say that a company’s key differentiator will be its talent. Yet, with recruitment being one of the biggest costs accrued by companies, small businesses will need to find ways to hire the best talent in the most cost-effective way.
Here are some ways to save on recruitment without compromising on talent:
Aim to lower your cost per hire
According to the International Public Management Association for Human Resources, over 30% of companies spend between $1,000 and $3,000 per hire, while 15 percent spend $5,000 to $7,000. For smaller businesses, these costs can be daunting. Before you begin working on lowering your cost per hire, identify the source of your current spend.
For instance, if interviewing costs especially for senior positions are high because of multiple rounds, find ways to bring down the rounds. Periodically assess your most cost-effective sources and find ways to leverage it. You could also focus on optimizing options like digital media and employee referral programs, which are cheap and easy to implement.
Watch out for these three metrics
Apart from cost per hire, there are three other recruitment metrics that can help you optimize your recruitment budget.
- Time to hire: The longer a position goes unfilled, the higher the cost per hire. Ensure you have a reasonable cut-off date and expend your best efforts across channels to ensure you’re getting the best resumes. Make your job descriptions accurate and your assessment tests fool-proof so that your shortlisted candidates actually fit the requirements. If your initial steps are water-tight, you’ll have a pool of high-quality candidates to choose from. Make the decision quickly instead of reopening the assessment process in search of the elusive perfect candidate.
- Source of hire: Understanding the source of your best hires helps you focus on the best-performing channels. Alternatively, channels that have consistently failed to generate high-quality candidates can be reduced or eliminated. Sometimes, certain channels work best for certain positions but not for others. Look at your past data to understand what your best talent acquisition channel for a particular profile or department is. If you have an applicant tracking system, you should also be able to understand how your conversion rate can be improved.
- Quality of hire: What happens if after all the efforts you’ve made in hiring the right candidate, he/she leaves the organization within the year? High attrition rates undermine your recruitment budget. Research shows that 90% of new hires leave their new job within the first month of employment, if the job does not match their expectations. Lack of cultural fit is one of the prime reasons for attrition, and countless studies state that cultural fit is a better parameter of overall recruitment success than technical expertise. Simple psychometric tests can help you gauge a candidate’s fit.
Part-time hires, consultants or freelancers
If you’re slim on budget, consider working with freelancers or consultants . Companies with a well-developed freelancer ecosystem can typically run on leaner budgets. Though freelancers typically charge a higher hourly rate, you can still expect to save about 20-30 % per role as you will save on health insurance, Provident Fund, work space, internet and other equipment. Moreover, since freelancers have worked with several types of companies, they are ready to hit the ground running, saving you training and onboarding costs.
Have several roles to fill but on a tight recruitment budget? Hire a freelancer and lower your costs by posting your requirements here.