One metric that most organisations track closely is cost per hire. It refers to the total direct and indirect expenses associated with an employee hire and is calculated by dividing the total hiring cost (numerator) with the total number of hires (denominator). The total hiring cost includes all internal and external costs incurred in onboarding an employee.
The internal costs refer to recruitment personnel salaries, employee referral payouts, interview costs etc. while the external costs include advertising, phone bills, background verification, cost of hiring an external recruitment agency, recruitment software, career fairs, travel or relocation, training etc., as applicable.
Most often, organisations realise that the cost per hire turns out to be a huge percent of the employee’s annual salary and other incidental expenses that the company bears. Additionally, there are other challenges in permanent hiring; for example, wrong hiring can become an irritant and hike the cost. Organisations have, therefore, begun to look for viable and cost-effective solutions.
Reliable staffing agencies like Careernet can help eliminate most of these problems. They help control the recruitment cost while nullifying the challenges faced in permanent hiring. When organisations utilise the services of staffing agencies, they save on hiring costs and gain flexibility and agility. Listed below are six major cost benefits for organisations in the long run. These inputs on cost benefits immensely help recruitment teams that are on the look-out for creative recruitment ideas.
1. Reduced hiring costs — As mentioned above, keeping the cost per hire under control is a big challenge for most organisations and partnering with staffing agencies can bring down costs significantly. Of course, there will be the minimal administrative cost of coordinating with the agency. Nevertheless, benefits like speedy and accurate hires through access to larger talent pools and established processes/tools etc. make this option more attractive, especially in the case of dynamic targetted hiring for niche skills or DEI kind of requirements, which may prove to be an expensive exercise otherwise.
2. Diminished training costs — One of the biggest benefits of using temporary employees through staffing agencies is reduced training costs. Most staffing agencies have the expertise to hire skilled and trained employees, who can start being productive from the word go. This simply means that organisations need not invest time, money and effort in training. It can prove to be a big plus when hiring specialists for niche projects.
3. Minimise wrong hire costs — At times, organisations end up with wrong hires, despite all processes being in place. Work suffers as there is a long wait to get the right hire. This is quite stressful, especially when one considers the costs involved. The other aspect is the overtime that other employees have to put in to make up for the time lost due to the wrong hire. Employee morale takes a beating and productivity suffers; there can even be burnouts and attrition. Thus, the overall cost of a wrong hire truly takes a huge toll on organisations.
However, when temporary employees are utilised through staffing agencies, organisations are almost certain to get the right hire. In a worst case scenario, the staffing agencies are liable to provide a replacement quickly, which drastically reduces the risks and costs involved.
4. Flexible scaling — Temporary staffing through a reputed partner like Careernet allows organisations to scale up or down, with speed, as per business needs. If organisations rely only on employees, a minimal bench needs to be maintained to scale up. This can cost the company as certain projects may not happen as planned. Also, if such projects are not in core areas, then the organisation may find it difficult to re-assign the employees. This challenge can be easily managed if temporary staffing agencies are involved in the process.
5. Lower per head employee cost — Temporary staffing costs are less than employee costs. The temporary employees are managed by the staffing agencies. Thus, the organisation benefits immensely from reduced per head employee cost. These funds can be utilised for improving employee benefits and enhancing the morale of the employees. Temporary staffing costs are fixed, with no variable compensation attached to change equations.
6.Increased productivity — When regular employees are freed up from extra work, they have more productive hours to contribute. While HR employees can utilise this time to plan and better implement employee-friendly policies, technical personnel can be utliised for increasing revenue through more billable hours. Thus, organisations can improve both their revenue and productivity.
There are many benefits that come with using the services of a staffing agency. In this blog, we have only highlighted the cost benefits as that is the major challenge faced by most organisations.
Please note that Careernet does not practice charging a placement fee from any job seeker across profiles. Word of caution to the fraudulent news and information, if anyone demands any kind of charges from you, in the name of Careernet Consulting.