Recruiting is an essential part of any organisation, and while it's easy to focus on the obvious expenses, the true costs of recruitment are multifaceted and often hidden. From advertising to payroll, here is a list of the costs you must consider before starting your recruitment process.
Direct Recruitment Costs
First, the most obvious expenses are direct recruitment costs—i.e., job board fees, recruitment agencies, and any spending on career fairs or other recruiting events. For many companies, this is likely to be the most visible part of the recruitment spend.
These costs can be more effectively managed. Rather than boosting your vacancy to every job board online, consider which boards have historically attracted the best people in your industry – and which have underperformed. Equally, for specific roles, it might be beneficial to cultivate a small number of recruitment agencies that specialise in your industry and will take the time to understand your needs. This often leads to lower fees and greater efficiency in the process. Employee referral programmes can also be beneficial in reducing reliance on external recruitment channels – fewer people and costs, but possibly better quality.
Marketing and Advertising Costs
Recruitment marketing can also be costly, charged at multiple points along the sales funnel. The costs can slowly add up as you craft and promote your employer brand across social media, your company website, and professional networks. If your employer brand appeals to the right talent, recruitment marketing will bring them to your door – but it won’t be cheap.
Building up a strong employer brand is essential. A clearly branded and well-designed careers site, regular content marketing for talent, and excellent employee reviews and case studies will help you attract people and give them insight into what it is like to work for you. Organic reach and employee engagement are also great ways to boost your audience without enormous spending.
Compensation and Benefits
Compensation and benefits are significant components of the overall costs incurred during the recruitment process. Top talent comes at a price, which means you’ll have to offer higher salaries and more attractive benefits and perks. According to recent data from the Office for National Statistics, as of March 2023, employers in the UK typically spend an average of £22.50 per hour on wages and an additional £10.10 per hour on employee benefits. These benefits, including private health insurance, pension schemes, and employee development programmes, might constitute up to 40% of an employee’s base salary. The challenge is to make those offers appealing enough to attract the best talent while keeping them affordable for your business.
Costs from Poor Hiring Decisions
Of course, the most important potential hidden expense is a bad hire, which can drag down productivity and negatively affect overall morale while increasing turnover. The financial loss is enormous as you will again need to start the recruitment process from scratch and reinvest in training the new hire. There can even be costs associated with paying out a severance and the expense of rehiring.
Onboarding and Training Costs
In any organisation, there are hefty costs associated with onboarding and training new staff. This refers to the process of integrating the new employee, enabling them to perform at their job, and transitioning them to full employment. Onboarding and training costs can include the expense of materials used to train the individual, the time taken by the trainer during the training period, and any other expenses incurred from getting the new hire up to full speed.
You can control these costs through a thoughtful, formalised, and efficient onboarding process. Perhaps it’s standardised training programmes, maybe it’s mentoring schemes, and there are also ways that you can use technology to deliver training content. The faster you can get the new hires to become productive employees, the bigger your return on investment.
A Holistic Approach to Recruitment Costs
Controlling the true costs of recruitment requires a holistic approach. When you understand what you are really spending to hire and account for the unseen expenses, you can optimise the recruitment process and make your entire organisation healthier.
While some costs cannot be avoided, many can be reduced with appropriate planning and forethought. By controlling recruitment costs, companies will be able to build a more resilient and less costly workforce.
Are you finding recruitment overly complicated? NES Advantage’s recruitment specialists have decades of experience providing staffing solutions to the Oil and Gas, Power and renewables, Infrastructure, Life Sciences, Mining, Automotive, and Chemicals sectors worldwide. Contact us and speak with someone from our team today to see how we can help you.
