Reducing Your Recruitment Spend

How to Reduce Your Recruitment Spend

Recruiting can be a significant expense to a business, but many employers don’t realise there are ways they can reduce their costs through the recruitment process and minimise their overall spend. Here is our guide to lowering your recruitment spend, without compromising on quality.

The Typical Recruitment Related Spend

We are going to use a few cost comparisons to illustrate the costs that many organisations can expect when recruiting new employees. How much do traditional recruitment agencies charge? If engaging one, they will generally charge you a percentage-based agency fee, which tends to be in the vicinity of 10-25% of the candidate’s annual salary. For example, if the average package you offered a new hire was $100,000 and the fee was 15%, then each time you hire you would be looking at paying around $15,000 per hire to the recruitment agency. If you are hiring multiple people through the year, you can see how quickly these recruitment agency fees can add up.

On the other hand, let’s look at an example where you hire an internal Recruiter to assist you with this process. Keep in mind that these numbers are industry averages so can vary from organisation to organisation, and are also in line with someone who is purely responsible for recruitment only. You might have someone in your business that balances both recruitment, HR or administration, and thus their figures would change accordingly.

Let’s say you pay them a base salary of $80,000 per year. You then need to take into consideration all employee costs such as superannuation, work cover, insurances, payroll tax and the cost of their office and technology expenses such as a mobile and laptop. Additionally, if you do choose to employ someone internally in your organisation, it is recommended to also invest in the technology to give them the best chance to succeed, such as an e-recruitment system, digital database and interviewing technology. Within the table below, you can see that these costs will add up to around $125,000 for a 12 month period. This is also not taking into consideration the possibility of a peak recruitment period which could mean the business will still may need to look externally.

Approaches for Reducing Recruitment Costs

It’s apparent that the average recruitment undertaking can weigh heavily on the company budget, but there are ways to decrease the burden. of what this could look like. Recruitment agencies like Harrison McMillan are a great alternative. We created an affordable pay-as-you-go outsourced recruitment solution. Unlike other recruiters, we offer you a flexible a la carte menu of recruitment services with fixed cost hourly rates. That means no percentage-based recruitment agency fees and only paying for what you need!

If you choose to outsource your whole end-to-end recruitment process to an external provider on hourly rates, they will need around 30 hours to complete it. This would cost around $5,000, which is a lot more affordable than the traditional percentage fee model.

When you engage a supplier on hourly rates, or per project, you have more flexibility and can choose the parts of the process you want to outsource. For example, if you choose to outsource only the advertisement writing, resume assessments, interviews and shortlisting, you are looking at only 10-15 hours of recruitment support, which would bring the cost down to just $2000-$2750.

Additionally, it is worth noting that if you are hiring more than one person with the same skill set, outsourcing all or parts of the process on hourly rates will be even more cost effective. With this model you are paying for the process and the expertise, so you have the ability to hire as many people and only pay for any additional service you need.

Closing Thoughts

If you have not considered engaging an external partner on hourly rate or per project basis, we would highly recommend you considering this as part of your recruitment strategy. It will not only save significant recruitment costs, but will provide more flexibility whilst still giving you access to the top talent on the market.

If you’d like to get a clear gauge of how much it will cost your business to outsource all or some of your recruitment, don’t hesitate to reach out to us and we can walk you through our model and associated service levels.