Ten ways to minimise cost-per-hire

Recruitment is an expensive process involving numerous steps. A typical process includes searching, screening, hiring, and onboarding along with training and orientation. Cost-per-hire is a measure of the average cost of hiring new talent and is an important recruiting metric. As per an industry research report of 2022, the average cost per hire is close to $4,700. However, many employers are of the opinion that the actual costs could run up to three or four times a new hire’s salary. While 30-40% of the costs are against tangible items, the rest are soft costs that include time invested by managers and department leaders.

Organisations are constantly looking for ways to reduce recruitment costs. Technology has cost-effective solutions to many challenges, so it is essential to stay up-to-date with recruitment techniques and tech tools. Searching and screening are two costly and time consuming steps. Employee attrition is another cost intensive factor. Cost reduction efforts must focus on these factors, among others.

Here are ten suggestions to minimise cost-per-hire:

1. Encourage employees to spread the good word: Progressive organisations that are doing all things right can ask employees to share their experiences and reviews on popular social and professional platforms. Candidates are drawn to positive reviews and are eager to work with such organisations. Attracting the right candidates without spending on advertising is an effective way of reducing costs.
2. Use technology profitably: Organisations must use the right recruitment software to automate the screening procedure and streamline the recruitment process. Using artificial intelligence (AI) and machine language (ML) tools can also boost efficiency and reduce costs. They are especially effective when the volume of applicants is high.
3. Establish a robust employee referral system: Advertising, searching, and screening candidates are resource-heavy activities in terms of both time and money. An effective and well-structured referral system can eliminate some of these steps since the candidates are referred by existing employees. They are very likely to have the right skills and qualifications, and also be the right fit culturally. In the long run, the cost of running the referral scheme will be worth the quality of candidates who join the organisation.
4. Use social media platforms effectively: Organisations can use social media platforms to enable candidates to get a glimpse of life at office, outline the mission and vision of the organisation, and also hear from existing employees. The more authentic and transparent such communications are, the more likely the organisation is to receive applications from candidates who would fit in. Organisations must invest time and effort to create effective social media messaging and campaigns.
5. Nurture a talent pipeline: Skilled candidates who are not selected during a recruitment drive should not be forgotten. The organisation must maintain a relationship with such candidates so that they can be approached when a future need arises.

Similarly, employees who leave the organisation should be maintained in the talent pipeline too. They are familiar with the organisational culture and can be great assets at a future date. They should be encouraged to reapply, except in certain circumstances. All of these steps reduce or eliminate the need to search for new candidates every time there is a requirement.

6. Shorten the recruitment procedure: Shorter interviews and fewer recruitment steps mean lower costs. The complete recruitment procedure can be shortened with telephonic and video interviews. Recorded video interviews are a great way to gather an impression about each candidate. The interviews can also be reviewed by recruiters later when a need arises. The onboarding process can be completed online too.

When job descriptions in advertisements are detailed and specific, the right candidates apply, making the list easier and quicker to sift through. However, being too specific can significantly narrow the talent pool.

7. Use group interviews: Observing candidates in a group is an effective screening technique. It not only reduces costs, but it also lets the interviewers get a glimpse of the candidate’s behaviour in a group. However, this method is more relevant to candidates for fresher roles than for experienced ones.

8. Focus on retaining talents: Organisations should keep track of employees who are keen to change job roles. Consider their suitability for openings within the organisation and offer opportunities for development. Employees feel respected and attrition drops. Attrition involves the recurring cost of recruiting and training new employees.

9. Listen to employee needs: Organisations must be open to offering benefits and perks to employees when possible and listen to their requests. For example, remote employment opportunities could be offered to candidates if the right talent comes along. This is another way to reduce attrition.

10. Use external help: Organisations should be willing to work with consultants instead of hiring permanent employees for short-term opportunities or projects. Keeping an employee engaged beyond the scope of that project may prove to be difficult later.

Organisations should look to partner with the right recruitment partners for the best results. Such agencies not only have the right experience and expertise, but they are also up to date with candidate expectations and tech tools. They provide access to a pre-assessed talent pool too.

Weigh the pros and cons of every option

Every option listed here may not work for every organisation. It is important to weigh the pros and cons of each technique and choose those that fit the business goals and budget of the organisation. Make each step count. The efforts to minimise cost-per-hire require a bit of delicate balancing between how much an organisation is willing to spend on finding top talent and the limiting the cost of recruitment.

Careernet’s Digital Hiring Solutions gives clients access to a pre-assessed talent pool and a platform driven by the right technology to source, assess, interview, and onboard candidates across industries.

Write to us at sales@careernet.in for more information.

Sources:

1. https://medium.com/hr-blog-resources/7-ways-to-reduce-your-cost-per-hire-d882400790f5
2. https://articles.bplans.com/recruitment-strategies/
3. https://www.forbes.com/sites/forbeshumanresourcescouncil/2020/03/30/13-ways-to-limit-recruiting-costs-without-impacting-results/?sh=21a9cf4419ad
4. https://www.freshworks.com/hrms/how-to-reduce-recruitment-cost/
5. https://www.shrm.org/resourcesandtools/hr-topics/talent-acquisition/pages/the-real-costs-of-recruitment.aspx