4 Indirect Recruiting Costs That Impact Your Bottom Line
Are you feeling overwhelmed by the demands of recruiting, struggling to find your next hire, and unsure if outsourcing is the right choice for you? In this article, we’ll discuss the true costs of recruitment, so you can make an informed decision. According to SHRM, a leading organization in several areas related to HR management, many employers estimate that the total cost to hire a new employee can be three to four times the position’s salary. That means if you’re hiring for a job that pays $60,000, you may spend $180,000 or more to fill that role. “Of those costs, I would say 30 to 40 percent are hard costs, and the other 60 percent are soft costs,” said Edie Goldberg (SHRM Foundation chair-elect).
The hard costs, or direct costs, of recruiting, are fairly easy to calculate – these cover all the money spent on tools and resources to advertise the position and source qualified candidates that eventually will be hired (Check out our article: Recruitment Costs: Comparing Direct Costs For Maximum ROI for a rundown on direct cost). But what about these often-overlooked soft costs? Let’s demystify where 60% of your spending is going by taking a deep dive into the indirect expenses associated with recruitment.
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Productivity Decline and Gross Profit Loss
Long, drawn-out recruitment processes can really put a damper on productivity. Just imagine having an open role that urgently needs to be filled, causing headaches for your organization’s smooth operation. And guess what? For each day that position remains vacant, you’re losing a cool $1,000 in gross profit. Ouch! Now, think about industries like engineering with their notoriously long hiring timelines – the costs per hire could shoot through the roof! But wait, there’s more. Those departmental leaders and managers who step up to support the HR-specific roles in the hiring process? Yeah, their time and effort also take a toll on productivity and the normal functioning of your company. When you add all these factors to the hard costs, the price tag of recruiting skyrockets.
Recruiter Burnout and Emotional Strain
The well-being of your hiring teams is another factor to take into account. Let’s talk about the emotional toll it can take. Dealing with constant ghosting, endless demands for higher compensation, flexible work schedules, and a laundry list of perks can really weigh on your team. It’s enough to make anyone lose focus on their other duties. Juggling all these responsibilities single-handedly is a surefire recipe for burnout. Remember, your recruiters are the face of your company to potential hires. If they’re overworked or unhappy, it’s bound to leave a negative impression. So, it’s essential to prioritize the mental and emotional health of your hiring teams, ensuring they can perform their best and create positive experiences for candidates.
Losing Ideal Candidates to Competitors
Another crucial factor to consider is the cost of competition. In today’s competitive hiring landscape, speed is of the essence. If you’re not prepared to act swiftly, you’ll find yourself engaged in an uphill battle to attract top candidates. In this fast-paced environment, delaying the job offer can have dire consequences. There’s a real risk of losing exceptional candidates to rival companies who are quick to seize the opportunity. Such a loss not only results in wasted time and money invested in the candidate thus far but also grants your competition the advantage of a highly talented new addition to their team. It’s essential to recognize the financial implications and strategic impact of losing a potential star performer halfway through the interview process due to external competition.
Time Wasted on Unqualified Candidates
Another cost that often gets overlooked is the precious time spent on unqualified candidates. Let’s face it: filling an open position is no walk in the park. On average, it sets employers back a whopping $4,129 and drags on for about 42 days. And here’s the kicker: the longer it takes, the more expensive it gets. Yep, the cost of hire shoots up as the search stretches out, especially for those trickier roles with higher salary ranges. But here’s the real frustration—HR and hiring managers end up slogging through heaps of resumes, manually reviewing applicants who simply aren’t the right fit for the company or the open roles. Talk about a major drain on time and resources! It’s high time we tackled this inefficiency and cut down on those unnecessary recruitment expenses.
The Solution
But the good news is that there are ways to ease these costs. By partnering with Velocity Resource Group, you can significantly reduce both indirect and direct costs. We have a 30-day project completion time, which is 13 days less than the industry average, and we can provide interested candidates as quickly as the same day the project starts. By entrusting us with the recruitment process, your team can focus on their high-value tasks without interruption. We source and qualify candidates, leaving only interviewing and hiring from a list of candidates that you already know are fit for the role.
By removing the heavy lifting from your hiring team, you avoid burnout and increase employee satisfaction. Our company has resources that allow us to achieve results that your team might not be able to achieve on their own, and our client managers offer strategic support working with your team to help them make decisions. This includes weekly check-ins with a dedicated client manager to develop and execute your specialized sourcing strategy, as well as data-driven, strategic recommendations for more inclusive sourcing criteria. Your team can have peace of mind that every stone was turned, and the candidates presented were the best options available.
Our streamlined process ensures that only Qualified, Available, and Interested candidates are presented, saving your team’s time and resources that might otherwise have been spent on unqualified candidates. This will not only maintain but significantly increase your team’s productivity, ultimately resulting in a positive return on investment for your organization.
At the end of the day, when you have a team of professionals working day and night to find and engage the most qualified candidates, it’s your best way to stay ahead of the competition. If there is one thing that differentiates us, it is the speed at which we work and get results. This significantly reduces the risk of losing your perfect fit to another company.
The Choice is Yours… and Velocity is a smart one!
When outsourcing recruiting services, it is important to consider both direct and indirect costs. While direct costs like search fees may seem like the most significant expense, it is essential to recognize the impact of indirect costs like the impact on productivity, the emotional toll, time spent on unqualified candidates, and the cost of competition. These costs affect not only your recruitment process’s success but the company’s overall success as well. By choosing a recruitment partner that takes a comprehensive approach to recruitment, you can optimize your recruitment process and ensure that you are attracting the best talent while saving money in the long run. Don’t overlook the significance of indirect costs when selecting a recruitment firm; it may make all the difference in the end!
Velocity Resource Group assists recruiters in the identification of qualified, available, and interested candidates. We source talent across multiple platforms, review resumes, screen candidates, and place them for you. We have over ten years of experience in attracting the best talent in the healthcare, hospitality, retail, technology, manufacturing, logistics, and supply chain sectors.
Call 813-586-1700 or email info@velocityresourcegroup.com to schedule a free demo.