What are my recruitment costs?

20 February 2014 | Recruitment

I facilitated a seminar for the Fife Chamber of Commerce today which focused on recruitment and selection.  During the seminar we covered recruitment costs, job descriptions and person specs, attraction and advertising methods, the use of agencies, and some selection techniques.

Interestingly, no one at the session knew what their cost per hire or recruitment costs were.  Would you know in your organisation?  We discussed the factors which would make up these costs and everyone fully understood these but had never tracked this previously.  This reinforces some of the beliefs I have regarding the role HR has to play in an organisation, especially SME businesses where in a lot of cases these have no in-house HR support.

Business owners need support on how to measure these and other associated people costs, and this is where good HR practitioners can add value.  By knowing your recruitment costs, you can measure these and identify areas to improve – ultimately improving the bottom line.  HR is often seen as a cost, however I believe we can add value – whether it’s in terms of recruitment, managing absence, engagement and improving staff retention.

It’s a given (or it should be!) that HR professionals are knowledgeable in the field.  However, do we add value?  How many of us think like a business owner?  This is where I like to think I’m a bit different, having worked in an operational role and also some of my previous HR roles were customer facing – no ivory towers involved!

So, in terms of recruitment costs, how can a business look to improve these?  

Firstly, you need to identify what your costs are.    There are internal and external costs to consider.  These include time (the salaries of the people interviewing or selecting), the cost of advertising, room hire, agency fees, relocation and training costs.  Once you know what all your costs are you need to then identify the number of people recruited.

The formula to use is:

External Costs + Internal Costs/Total Number of Hires in Time Period

Research in 2013 shows the median cost per hire in the UK to be £1547 (management roles were £4000).  How does this compare to your organisation?

By identifying these costs, you can then investigate the effectiveness of recruitment campaigns – the number of responses to adverts, interview success, job offers and so on.  This is where you can look for improvements and see where you can reduce your costs in future.

I’ve worked with a number of clients who have disputed there’s any significant cost – claiming they’re paying the manager’s salary anyway so that shouldn’t be included in the formula.  Would it not be better to have the manager managing – helping drive sales, improve customer satisfaction and coach people to perform better?  All that helps you retain customers – and helps your profits.

I’d welcome other people’s views on the cost of recruitment and any challenges you face.  I’ll be sharing some other views I have on the subject of recruitment in the coming days.

If you’d like more information on how to reduce your recruitment costs or help with a particular recruitment challenge, please get in contact.

Related Topics

How to Conduct an Interview

How to Conduct an Interview

In this article we are looking at how to conduct a job interview. We will provide you with some job interview tips so that yours and the candidate experience is positive. You will find out more about the hiring process for your talent acquisition and how to prepare a...

How To On-Board New Staff In A Welcoming Way

How To On-Board New Staff In A Welcoming Way

How To On-Board New Staff Looking at how to on-board new staff effectively can have a positive result in the long run for your business.  First impressions are not just a responsibility for the employee, it's also important for managers to make new staff experience a...

How to Conduct a Telephone Interview

How to Conduct a Telephone Interview

As you know, finding the right candidate for your business can be a time consuming process and being able to reduce the time it takes to find the right person can be an advantage to you and your business’s needs. Here at The HR Booth, we understand that finding the...

What are the benefits of a jobs description?

What are the benefits of a jobs description?

A jobs description not only helps you to have better job postings to attract the right candidates, it also helps you to avoid being in a situation where your employees are not fulfilling their duties. It sets clear expectations at the outset of their employment and...

8 Job Internship Benefits for Employers and Employees

8 Job Internship Benefits for Employers and Employees

A Job Internship can open up the door to many employment opportunities. Finding work can be a real challenge, especially if you lack experience. It’s almost a catch 22. You need a job to get experience, but you struggle to get the experience you need without getting a...

How to Detect False Claims in a CV – Sifting out the Fraudsters

How to Detect False Claims in a CV – Sifting out the Fraudsters

False qualifications are a very popular way of fraudulent CV’s. A CV is a great way to draw together relevant skills and experience and to show potential employers and agencies how the job criteria have been fulfilled. The desire to present facts in the best possible...

Are you ready to elevate your HR strategies?

Connect with our expert team for tailored solutions and insights. Call The HR Booth at 01383 668178 or reach out via email at info@thehrbooth.co.uk or use the contact form.

Let’s transform your human resources approach together!