Investing in talent is crucial to set your company up for business growth. The right hires will strengthen your existing foundations by bringing in vital skills and fresh perspectives. However, sourcing and securing the correct employees is not only time-consuming, but can also be highly costly. To facilitate the hiring process, many companies involve third-party recruitment consultancies, however, this often results in businesses outlaying more than they anticipated. Due to a lack of transparency and incorrect auditing of spending, firms are finding it difficult to stay on top of hiring spend and end up paying far more than necessary. By getting a handle on recruitment agency fees, companies can utilise their budget better.
How expensive are recruitment agencies?
Calculating the cost of working with talent acquisition agencies is not always straightforward. Working with a third-party recruiter entails a fee for their service, however this figure is not set in stone and can depend on a number of variables. For example, the job role, location and type of hire in regards to contract or permanent staff, can all effect the overall fee. On average, this figure is 15-20% of the annual salary for an executive role, but can increase to 30% for hard to fill positions. This means one hire with a salary of £50,000 could cost your company between £7,500 and £15,000 in fees alone. If a business is hoping to recruit a team of senior staff, the cost can quickly become a financial burden.
An external agency may help bring potential employees through the door, however it is even more crucial to think about retention strategies for future employees. In this current candidate-led market, it is vital to put emphasis on retaining staff as soon as they onboard. This is where the spending that was used on agencies can be better utilised. Financial benefits and bonuses can be effective motivators for employees to stay with a company, and can also drive productivity in the long run. The money can also be used for other perks such as continued professional development, which HR professionals are increasingly using as a mechanism to encourage staff retention. When it comes to recruitment, it is always smart to think ahead, and consider how you will create a loyal team that will stick with you as your business expands. While an external agency is motivated to get people through the door – it is in-house HR teams which are best placed to implement and facilitate long-term strategic workforce plans.
Where do things go wrong?
With many firms working with a number of external recruiters at once, it is difficult to keep track of total expenditure. With no in-house team managing all hiring activity, it is easy for things to be miscommunicated. If there are various staff taking responsibility for different recruitment projects, it is quite possible that the total being spent is not being tracked efficiently. Monitoring recruitment agency spend accurately is imperative to stay within the budget and assess areas for improvement.
A lack of transparency between firms and their external recruiters is also hindering growth opportunities. Many firms are left in the dark with regards to how much time and money is being spent on each hire. With clarity into the process, many businesses may find that they do, in fact, have the resources to take the job into their own hands.
How to cut back on recruitment agency spend
To take control of how much your company is spending on hiring it is vital to have a robust and transparent recruitment and a talent acquisition strategy in place. It is important to work systematically and address any issues in your current process. To move forward, businesses should begin by focusing on mapping their spending. By conducting a full audit, you will have in-depth insight of previous recruitment activities and be able to highlight any issues with sourcing, controls and costs.
The results from the audit can be used to identify solutions to your current and future challenges. Careful assessment of your procedures will allow expert strategies to be implemented that enable your company to reduce the time-to-hire and costs by subsequently improving the quality of talent you engage and attract. By truly understanding your workflows and key performance indicators, you will have greater business intelligence that can aid decision making.
For more information on how to take control of your recruitment agency spend, get in touch today