Given the potential expense of hiring new staff, particularly in external hiring, it is no surprise that agencies and internal teams are constantly searching for ways to reduce external recruitment costs.
If you dig deep into the duties of HR professionals, you will find that they are under budget pressure to cut costs. Cutting expenses is undoubtedly necessary, but understanding when and how to do it are two very different things. Today we will share the 5 easiest ways to reduce external recruitment costs and streamline the hiring process while exploring the topic in detail.
Important Recruitment Metric: What Is External Recruitment Cost?
Prior to analyzing the expenses associated with external recruitment, let us first define the term. There are circumstances in which employing someone internally or from the existing business structure can be very beneficial, but there are also circumstances in which using an external recruitment approach will be more successful.
You’ll have access to a far wider pool of talent when hiring external applicants. Upskilling is a terrific method to support the growth of your workforce, but it can take a lot longer to train a new employee if you don’t have someone in your organization with the fundamental knowledge required. You’ll be more likely to fill the role with an external talent source if the candidate already possesses the technical know-how required to start contributing.
Now, what expenses are considered external recruitment costs? External recruitment cost is a crucial recruitment metric that measures the expenses incurred by an organization when hiring new employees from outside the company. Thus, all costs associated with external recruitment, from advertising a job opening to bringing on a qualified applicant, are included.
When To Recruit From An External Talent Pool?
- When you need to grow the business.
- To bring in fresh, new perspectives and improve diversity.
- When a change in direction or mentality is needed.
- To acquire new skills and expertise within your organization.
What Types Of Expenses Are Included In External Recruitment Costs?
We have already got an overview of what the term external cost means, but what are the costs it includes? It encompasses various expenses associated with the recruitment process.
We have listed down the expenses that are part of external recruitment costs. Let’s have a look at them.
💸 Advertising and marketing costs: This includes expenses related to job postings on job boards, social media platforms, print media, and other advertising channels.
💸 Hiring Agency fees: If the organization uses external recruitment agencies or headhunters to source candidates, fees paid to these agencies are included in external recruitment costs.
💸 Travel and accommodation expenses: When recruiters or hiring managers travel to attend job fairs, conferences or conduct interviews in different locations, the associated travel and accommodation costs are part of external recruitment expenses.
💸 Candidate relocation expenses: If the recruited candidate requires relocation to join the organization, expenses related to moving, temporary accommodation, and other relocation benefits.
💸 Background check and assessment fees: Costs associated with conducting background checks, drug tests, and other pre-employment assessments.
💸 Candidate referral bonuses: Organizations may offer referral bonuses to employees who refer successful candidates for open positions. These bonuses are considered external recruitment costs.
💸 Technology and software expenses: Costs related to applicant tracking systems (ATS), recruitment software, and other technology used in the recruitment process.
💸 Miscellaneous hiring expenses: Other miscellaneous costs such as printing materials, hosting recruitment events, and conducting informational sessions for potential candidates also contribute to external recruitment costs.
By tracking external recruitment costs, organizations can evaluate the efficiency of their recruitment processes, identify areas for cost-saving, and make informed decisions to optimize their hiring strategies.
How To Reduce External Recruitment Costs In 5 Easy Steps?
Although hiring through an external or third-party agency can result in long-term cost savings, there may be an initial fee. A fixed fee, or a percentage of the candidate’s income, is what recruitment agencies charge for their services. This can be costly, particularly for new or small enterprises.
Reducing external recruitment costs requires a strategic approach that focuses on optimizing various aspects of the recruitment process while still attracting and hiring top talent. Here are several strategies for how you can reduce external recruitment costs in five easy steps.
1️⃣ Streamline Hiring Processes With The Best Recruitment Tool
Evaluate and streamline your recruitment processes to reduce time-to-hire and associated external recruitment costs. Going for an efficient applicant tracking systems (ATS), automating repetitive tasks, and standardizing interview and evaluation procedures to improve overall efficiency. You can easily advertise your job vacancy, get leads, and finally onboard suitable candidates, all with one tool. It will reduce the cost of every step of your recruitment process.
To streamline the hiring process and reduce external recruitment costs efficiently, you can go for easy.jobs– the ultimate hiring solution. This stunning tool will help you onboard the most efficient candidates seamlessly.
Moreover, with easy.jobs, you can practice more productive strategies to reduce external recruitment costs. Here we are mentioning some exclusive ways to reduce external recruitment costs that you can easily execute using easy.jobs.
🌟 Employee Referral Programs
Implement and promote employee referral programs to leverage your existing workforce as a source of quality candidates. Offering incentives or bonuses for successful referrals can motivate employees to actively participate in the recruitment process, reducing the need for external advertising and agency fees.
In easy.jobs, you will get a field to add referees’ names. This way, your organization can easily track employee referral programs and offer incentives.
🌟 Optimize Job Descriptions
Craft clear and detailed job descriptions that accurately reflect the role’s responsibilities, requirements, and company culture. This helps attract genuinely interested and qualified candidates, reducing the time and resources spent sorting through irrelevant applications.
easy.jobs offers ready job templates that will help you create candidate-focused job descriptions that will instantly grab the attention of candidates.
🌟 Utilize Internal Talent Pools
Maintain and regularly update an internal talent database or talent pool of previous applicants, interns, and employees who have expressed interest in future opportunities. This allows recruiters to tap into a pre-qualified pool of candidates before resorting to external sourcing methods.
Every candidate applies for any of your organization’s job posts, and their data is stored in easy.jobs internal talent pools. So you can easily browse there and consider them for future job vacancies.
2️⃣ Opt for Cost-Effective Advertising
Utilize cost-effective online job boards, industry-specific forums, and niche job platforms to advertise job openings. Compare the effectiveness and cost-efficiency of different advertising channels to allocate resources more wisely.
3️⃣ Direct Sourcing and Networking
Invest in building relationships with industry professionals, attending networking events, and engaging in direct sourcing efforts to identify and connect with potential candidates directly. This approach can reduce or eliminate the need for costly recruitment agencies.
4️⃣ Internal Talent Mobility
Encourage internal career development and mobility by promoting job openings within the organization. Internal candidates are often familiar with the company culture and processes, requiring less training and onboarding, which can significantly reduce recruitment costs.
5️⃣ Social Media and Employer Branding
Leverage social media platforms and employer branding initiatives to showcase your company’s culture, values, and opportunities. Building a strong employer brand can attract passive candidates who are more likely to apply organically, reducing reliance on costly external advertising.
✨ Bonus: Here are top social share templates to create a buzz about your job posts instantly
Monitor, Analyze Recruitment Metrics Cost-Per-Hire Regularly
There are numerous strategies to lower recruitment costs, from lowering attrition to enhancing the hiring process, from utilizing independent contractors to strengthening your employer brand. Although it seems incredibly easy, the reality is frequently far more difficult. You will need to continuously monitor and analyze recruitment metrics, including cost-per-hire, time-to-fill, and source effectiveness. Use these insights to identify areas for improvement and adjust your recruitment strategies accordingly.
By implementing these strategies and continuously optimizing your recruitment processes, you can effectively reduce external recruitment costs while still attracting and hiring top talent for your organization.
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