Creating a workforce of highly skilled, ambitious individuals is something that all companies strive to achieve. Whether you’re replacing an employee or filling a new role, building and diversifying your team is essential for a business’s development. Achieving this means undertaking some pretty serious recruitment, which costs money.
You will of course be aware of the literal price of hiring a new employee - paying their wages comes with the territory. But do you know about the hidden costs? The amount of money your business could lose whilst recruiting a role doesn’t always have an obvious price tag, but it’s definitely something you should be thinking about.
To find out where your business could be losing cash, we’ve broken down the processes involved to uncover the details:
- Who’s doing your recruiting?
If you’re recruiting in-house, a member of your management might be taking on the responsibility. No-one knows a team like their manager, so there are definitely pros to delegating recruitment in this way. However, there is often a cost attached. The manager could be splitting their time between their usual tasks and hiring, which means neither has their full attention. This could cause delays in a number of areas, and in turn – cost your company money.
A report by Oxford Economics called ‘The Cost of Brain Drain’ found that companies spend, on average, £370 advertising per employee. That’s only one element of the cost. When you consider the time it takes researching the most suitable place to advertise and take into account the delays if you publish it in the wrong place, the cost could increase the longer it takes to find the right candidate.
Sifting through and handling CVs is crucial to making the right hire, but it’s also a time consuming process. Cutting corners at this point could mean missing out on the details and taking the wrong candidate to interview. When you’re taking on the hiring process in-house there’s no easy way around handling applications, it’s a necessary expense that can’t be avoided.
The Oxford Economics study also estimated the overall price of interviewing for a new candidate to be between £700 and £800. This is based on an average amount of time spent conducting interviews and discussing applicants. So in this case, time really does mean money.
While you’re looking to fill a position, the lack of measurable productivity from that role will either be draining your company of money, or taking the time and attention of another member of staff.
In an attempt to plug this loss of output, many companies resort to hiring temporary workers to fill positions as a short term solution. Results from the Oxford Economics report found that temporary workers tended to be hired for just less than 18 days and companies spent an average of £4,000 on hiring them. This can be a good interim fix while you’re looking for your next hire, keeping your business thriving in the meantime.
Visualising the cost of time spent on recruiting your perfect employee is not easy. However, with data insights from the study by Oxford Economics, we can estimate the average hidden costs of recruitment to be around £5,400, with figures rising when recruiting for higher level jobs.
Spending time on recruitment is unavoidable. To keep your business going strong and to bring in high quality candidates, you can’t bypass certain time consuming elements of the process.
However, there’s a way to reign in hidden costs and that’s by using a recruitment agency. When looking for a new sales employee, bringing in a company like Pareto can save you time in some of the key areas we’ve highlighted.
Skip the cost of advertising and let your agency reach into their pool of vetted professionals to find you the ideal candidate. Avoid spending time and money on sifting through CV’s and let your recruitment agency do it for you. At Pareto, we are always working to single out the with the top 20% of sales persons, so you can be sure of an excellent candidate before you even look at their CV.
What’s more, if you’re hiring graduates, we can often get candidates to you quickly, so you won’t have to wait for too long to conduct the interview. With faster processes you also shouldn’t have to employ interim staff to cover lost productivity.
When you use Pareto to find your superstar salesperson you can agree the price of recruitment, so all costs are completely upfront.