When recruiting a new employee to join a team, you’re paying for more than just a salary. The cost of recruitment may be more than you realise. The process of replacing employees can also affect a small business’s productivity and time management, which can negatively impact profits. Many employers don’t realise the true cost of recruiting as they don’t consider all the indirect costs.
It’s important to understand how internal and external costs affect your business, as both can impact your bottom line. In this blog post, we explore the true cost of recruitment, along with the importance of having an experienced recruitment agency to help save you in the long term.
What Are External Costs?
As the name suggests, external costs are expenses incurred when using outside resources or services to advertise a position or alleviate workload. These can include:
- Recruitment agency fees: On average, the cost of recruitment is around £3,000. While this may seem like a lot, having someone externally manage the recruitment process can be a huge saving in time for employees internally.
- Job boards: The costs of recruitment also include posting on job boards. These adverts vary in costs and can often involve filtering through numerous applications.
- Software costs: The expenses associated with software and programs used in the recruitment process should also be included in your recruitment costs. Software can include designing templates for online applications, as well as tracking candidates at different stages of the recruitment process.
- Temporary employees: Hiring a temporary employee for an interim period is a useful way to lessen your team’s workload, but it also involves expenses associated with onboarding time and training.
What Are Internal Costs?
There are also internal costs that come from managing recruitment in-house with your own resources. Examples of the internal costs of recruitment include:
- Job description: Writing a job description that effectively describes a role, qualifications and responsibilities takes time. However, it’s pivotal in attracting the best talent, as an easy-to-understand and well-written job description can make all the difference.
- Recruitment team: A recruitment team handles the process of shortlisting CVs, conducting interviews, drafting paperwork and documentation—making their wages and time part of your internal recruitment costs.
- Induction costs: The early period where a new employee is being trained, learning new software and procedures should also be factored into internal costs as they’re still taking time to acclimate to the new role.
- New equipment: This can include a phone, computer, desk, chair and any accommodations a new employee may require.
- Lost production: When a new employee is being trained by another team member, that employee is essentially taking time away from their tasks. It’s a small, albeit necessary, loss of productivity.
- Additional payroll costs: This includes salary, pension, NI (National Insurance), benefits, bonuses and holiday payments.
Additional Costs
The cost of recruitment has to account for unforeseen circumstances, such as a new employee not being a good fit. Unfortunately, this means more time being devoted to filtering through candidates, contributing to more internal and external costs. These issues emphasise the need for a recruitment specialist to avoid the extra costs and challenges associated with finding the right employee.
Minimise your internal and external costs of recruitment
A recruitment process should be tailored to the position you are trying to fill to ensure all candidates are assessed on whether they meet the criteria. This is why it’s crucial to have an expert HR recruitment agency to help your business find the ideal candidate to achieve long-term growth. The experts at Clover HR work with you to find a candidate who fits your requirements and company culture. Reach out to our friendly team with any enquiries you may have. Feel free to call us on 0330 175 6601 or email us at info@cloverhr.co.uk.
