Britain is experiencing a record-breaking high in employment numbers; with UK unemployment at its lowest rate since 1975. However, as economic uncertainty continues to hang, companies are under increasing pressure to reduce overheads. The result is the daunting task many organisations are faced with: how to find and hire talented people with a small recruitment budget. This is especially true for small and medium-sized businesses. Using recruitment agencies appears to be the most straightforward approach, but it can also be the most expensive, with agencies typically charging thousands of pounds per hire. Alternatively, companies can hire without an agency; a process that is arguably more difficult and time-consuming. There are now options that are less polarised, such fixed fee recruitment, but fewer people are aware of the benefits it provides.
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So, what is the real cost of recruitment?
The amount that a recruitment agency will charge varies depending on several factors. If a company hires multiple agencies, that increases its chances of quickly hunting down a talented person to fill its role, but it’ll cost more. Recruitment agencies competing to fill the same role hike their prices to compensate for the potential of losing out. For example, a Managing Director (MD) hires three agencies to fill the role of a Junior Sales Executive. The agent that fills the role can demand a premium fee of 20% because they have a 33% chance of filling that role successfully. In contrast, the MD can hire a recruiter exclusively who may slash their fee by 5% as they are not competing against other agencies and will fill the role eventually.
There are also recruitment agencies that specialise in filling specific roles, an expertise that can create better results. An agency that specialises in the recruitment of salespeople, for example, is likely to have an enormous database of sales candidates and a greater understanding of what those candidates have to offer. What this means for the hiring party is they must decide on their priorities; are they more concerned with talent, speed of hiring, or cost-effectiveness? Simply put, recruitment takes a lot of work, and margins are so high because competition is so high. But, what about recruitment budget limitations?
What other options do employers have when it comes to affordable recruitment?
Firstly, organisations should check their own contact networks for potential talent, and encourage their existing employees to refer people they know – a practise that can be compensated with a reward-per-hire scheme. The Internet has made recruiting without an agency far more viable, too. Internet. Online job boards and social media – LinkedIn specifically – have made finding and reaching out to high-quality candidates easier. A business with a small recruitment budget can task a single employee to spend weeks contacting people on LinkedIn and wading through CVs on job sites. They could also utilise online candidate databases, which have already organised and categorised lists of candidates, cutting the amount of time it takes to find the right talent to contact.
But, this isn’t the cost-effective solution employers may think it is. Staff tasked with recruiting for a role spend many hours preparing a plan for hiring the right candidate. It takes a business an average of 37 days to fill a position within the same industry. It may be tempting to rush through the process to cut down on time, but it is important that businesses keep in mind that a bad hire will almost always cost a company more than hiring the right candidate. 38% of bad hires are a result of companies trying to fill positions quickly, and over 40% of companies say that a bad hire in the last year has cost them at least £20,000.
There is, however, a third way: fixed fee recruitment. 95% cheaper than traditional recruitment agencies and less time-consuming, fixed fee recruitment, offered by companies such as ecruit.co.uk, involves paying a set fee for services such as: dedicated campaign management, streamlined candidate acquisition, tailored job adverts and online promotion, search engine optimisation of job advertisements, applicant tracking and manual shortlisting of candidates. Outsourcing these time-consuming activities for a fixed fee could be the best option for employers with a small recruitment budget who are looking for high-quality candidates.
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