It costs about $4,000 to make a new hire.
This might not sound like much, but if you’re building a team comprising tens or hundreds of employees, you’ll find that your recruitment costs are spiraling out of control. And as a startup, you probably don’t have the budget to spend as much as you’d wish on recruitment.
This is why keeping recruitment costs low is a top priority among many startup founders or human resource managers. The good news is it’s not impossible to reduce your hiring costs. As long as you know what to do and what not to do, you can bring your costs down to within your budget.
In this article, we’re sharing a range of strategies you can use to reduce the cost of making a new hire.
Let’s get into it.
Understand Your Recruitment Needs
A common mistake among small business owners who’re recruiting is starting the process without having a clear picture of the company’s recruiting needs. Have you ever hired two employees only to realize that you actually needed four? Or hired four while you needed two?
Over-hiring or under-hiring will increase your costs. If you needed two hire two employees but ended up hiring four, for instance, you’ll unnecessarily increase your wage bill. There are also indirect costs that come with hiring an employee, such as increased workers’ compensation coverage.
As such, it’s vital to develop a clear understanding of your recruitment needs before you start hiring. Conduct an assessment and establish your company’s needs. Don’t just focus on current needs. Factor in near-future needs as well.
Understanding your recruitment needs also means understanding the roles you’re looking to fill. This helps improve your chances of making the right hire every time. If you make a bad hire, you will need to replace the employee, which costs more time and money.
Hire at the Right Time
Is there ever a right time to hire?
As a rule of thumb, you want to hire as soon as there’s a need. If a current employee leaves, you generally want to replace them as soon as possible.
That can be unavoidable, but there are times when you want to hire more people, but the need isn’t pressing. Perhaps you’re planning a business expansion and you have to hire people to fill the jobs that will open up.
If you’re in such a position, it might be economical to wait until the conditions in the labor market are favorable. Yes, the labor market isn’t constant. Like other markets, it changes from time to time. There are times where there are plenty of qualified job seekers in the market and there are times when job seekers are few and far between.
If you’re hiring several employees, it’s best to dive into the labor market when it’s thriving. This improves your chances of finding ideal employees quickly. But if there’s a labor shortage, it can take you a long time to find the right employees and you might end up settling for average or unsuitable people just because you have to fill those positions.
An ideal time to hire if you’re in the market for several employees is right after the graduation season. During this time, thousands of graduates have entered the job market, so it won’t be hard to attract qualified candidates.
You also want to hire when you have enough time to conduct the recruitment. If you’re hiring when you’re in the middle of other important tasks, you might not have enough time to assess applications and conduct interviews. You could rush through the process, which increases your chances of making a poor hire.
Advertise on Free/Low-Cost Job Boards
As a startup, you certainly aren’t receiving unsolicited or speculative job applications. For now, when you want to hire, you need to get the word out. This means making a job ad and posting it on a public platform.
In the old days, employers had to put a job ad in newspapers and magazines. It was also commonplace to see “job vacancy” signs on the doors or windows of a business.
Today, those strategies won’t deliver good results. The world has gone digital and job seekers are looking for jobs on digital job boards. As such, advertising your open positions on digital job boards is the way to go.
Some job boards charge a premium for job ads. Others offer free or low-cost services.
Of course, a high-quality job board will charge a premium because you’re more likely to get high-quality employees, but this doesn’t mean free job boards are ineffective. In fact, when your goal is to reduce recruitment costs, it’s in your best interest to use free or low-cost job boards. Just keep in mind that you might receive a flurry of applications, which can take time to sift through and pick out the candidates you desire.
Use Social Media
Jobs boards are more desirable over social media because they’re highly specific. Their target audience comprises mainly employers and job seekers.
Social media is for everyone, but you can still use it as a recruitment tool. You’ve certainly seen jobs ads on your social medial feed, right?
Posting a job ad on your company’s social media feed is free, but you can make a sponsored post to expose your ad to a wider, more targeted audience.
To successfully use social media as a recruitment tool, you have to use the right channel. Don’t go posting your job ads on several social media channels before you can. LinkedIn will deliver the best results because its career-focused. Twitter, Instagram, and Facebook can also be effective, depending on how you use them.
Ask Current Employees for Job Referrals
It’s surprising that most small employers don’t ask their current employees to refer the company to their friends who might be looking for employment. Yet, employees are a free and effective source of new talent.
When there’s an opening, don’t shy away from asking your employees to share the post on their social media pages. Chances are they have job seekers in their circles and just like that you could end up with a good hire.
Build a Talent Pool
A talent pool is a database that has the resumes of qualified candidates who have previously applied to work at your organization.
The average corporate job ad gets about 250 applications.
Of course, you only want to hire one person. This, though, doesn’t mean the rest are unqualified or that their resumes should be tossed in the bin. There are likely a handful of qualified candidates in there.
Instead of doing away with their resumes, put them in a special database or folder. That’s how you build a talent pool. Gradually, you’ll have a list of potential candidates for various roles. When a job opening arises, you’ll no longer need to create a new job ad. Just go to your talent database and contact the next person on the list.
Getting a new employee out of your talent pool slashes a lot of time off your recruitment timelines. It also saves you a lot of money.
Use a Recruitment Agency
Using the services of a recruitment agency is one of the best ways to save on recruitment costs. An agency takes much of the recruitment processes off your hands. They have talent pools, which is why it’s quicker to fill a position through an agency.
You’re probably wondering whether the cost of in-house recruitment is lower than the fee a recruitment agency charges. Well, the short answer is yes. The direct cost is lower, but where you make the most saving is on the indirect costs of hiring. If you value your time, or if your time is better spent on other business activities, you’ll outsource recruiting to an agency.
Simplify Your Onboarding Processes
Onboarding is part of recruitment, and it’s also where you can make good savings.
If your company is stuck in the old days of having new hires fill out physical forms, you aren’t making a good saving. You can simplify onboarding by making use of digital forms, like those offered by WorkBright. New hires can fill out your HR forms even before they physically report for work.
A smoother, hassle-free onboarding experience saves you money and leaves a good impression on your new hires. This can help increase employee retention.
Keep Your Recruitment Costs Low
Recruitment costs can put a big dent in your bottom line. Don’t let this happen.
While recruiting is a necessary exercise, there are steps you can take to not only reduce the associated costs but also keep them low. Put the tips fleshed out in this article to use.
Explore our blog for more workplace tips and advice.