Inflation. The Cost of Living Crisis. Increased Spend.

These feel like constant fixtures on the news at the moment.

You have probably felt the (pretty significant) pinch in your own business finances.

However, businesses need to continue to grow.

And growth typically means more people to hire.

Given the need to save money, understanding how much your Cost Per Hire (CPH) is goes a long way.

Most organisations measure CPH using the Society for Human Resource Management’s formula:

(The salary of the new hire should not be included in these calculations.)

This formula gives you a good idea of how much it actually costs you to run any kind of recruitment.

If you punch the numbers in then you might be very surprised at how much it truly costs.

According to Oxford Economics and Unum, the average cost of taking on an employee (on a salary of £25,000) is £30,165.

This incorporates an average spend of £5,433 on recruitment and absorbing the loss of productivity, while training the new employee takes on average 28 weeks!

It’s worse if you make a bad hire though – the average cost of a bad hire is £132,000 (for a typical mid management role at £42,000 a year).

But fear not, we are here to help you save money.

We know recruitment can be pricey, there’s a lot involved.

So here are 4 ways to reduce your hiring cost without sacrificing quality.

Have a Process and Stick to a Schedule

The first step is simple. Plan out a recruitment schedule and stick to it.

Knowing what your process should look like and how long it will take is incredibly important.

In these modern times you cannot dawdle and mess about.

You have to move quickly to secure top talent (as they won’t be available on the market for long).

Look at your recruitment process and schedule.

Then streamline it as much as possible.

This will give you a clear and effective timeline that means you’re not wasting time, resources, or money.

Saving time will save you money.

You can even invest in digital automation/tools to help you.

Take the application and screening portion of the process as an example.

Implement smart questions to screen and evaluate the skills of candidates applying for specific roles. Automate this process as part of the hiring workflow to identify and eliminate ineligible candidates early on.

A lot of job boards allow you to do this for free on your adverts.

This reduces recruitment costs by streamlining the selection process and also improving the quality of candidates (with minimal exertion or expense).

A concrete schedule is especially important at the interview stage.

Create a dedicated interview schedule that can be shared with the candidates.

Just creating this timeline and communicating it with candidates will drastically decrease dropout rates of candidates, establish expectations for both parties leading to improved perception of your business, and gives you time to respond and provide feedback.

By giving this information and sticking to it, candidates know when they expect to hear from you. It provides a clarity that makes the process easier for everyone involved.

Not only this you are also unlikely to have delays and therefore avoid additional costs.

Set dates give candidates peace of mind, however in the same breath, do not make these too elongated or drawn out as competitors are moving quickly.

It’s a balancing act that requires some forethought and planning, but is well worth it in the long run as the efficiency will save you time, resources, and money.

Use Recruitment Agencies Properly

Agencies get a bad rap.

But we are really good at what we do.

People usually use us because they do not have the time, resources, or access to individuals that they need to make a quality hire.

That’s understandable, it’s a lot of time and money to invest in.

This affects small and big businesses alike.

Luckily for you, you will be spoiled for choice.

If you’re after specific specialists – there are loads of specialist agencies out there.

If you’re after “en masse” recruitment – there are lots of temporary staffing agencies out there.

If you’re after local people and wanting to work in the local economy – there are lots of these agencies too.

Whatever your needs, there are plenty of recruiters you can use.

However, if you’re going to use an agency, make sure you keep your agency pool small.

Even if you only do it for a short period of time.

This will give the agency time to deal with your request and get quality candidates in front of you.

It minimises duplications and time wasted communicating with multiple agencies to ascertain “candidate ownership”. Time is money after all.

Use a couple of select agencies that can provide the kind of workers you require and then give them lead time to work unhindered by competition. This will save so much hassle.

Not only this, if you are short on time and resources using an agency can be the cheaper option than trying to do it all yourself (certainly a lot less hassle).

You are likely to get a highly qualified, pre-screened and vetted candidate and place them quickly and efficiently.

And typically only pay once the placement is made. No placement, no fee. What could be easier?

Ideally you should establish a partnership with a sole agency, often leading to a reduction in rates and a mutually beneficial relationship where you get the cream of the crop and focussed attention from the agency.

If this is still all too much for you then why not try Recruitment Process Outsourcing?

Most agencies offer additional services, for example we offer services like compliance services, combined job advertising & marketing, and benchmarking.

Outsourcing part of the recruitment process is a cost efficient way of making your process as streamlined as possible without compromising on quality (and keep costs low).

You can save a lot of time outsourcing things like compliance checks.

Manage the Market

Closely related to putting in place a schedule is understanding the market.

Currently there are huge skills gaps across several industries. There are also plenty of people looking to move jobs quickly and change careers too.

The pool of suitable and available candidates, however, is not never-ending.

You are likely to get a lot of applications but after screening you are usually only going to get down to 2-4 maximum to interview, if you’re lucky.

This is why automated screening is important, it sorts the wheat from the chaff and you get a better shortlist to further reduce to an interview list.

If you only have two suitable candidates, get the ball rolling with them and if they are great, hire them.

Don’t wait and risk losing them and having to start the process all over again, costing money.

Not only this, but with the skills gap, you need to realise that finding someone that fits 100% perfectly to a job description is highly unlikely.

Instead try and focus on the core experience and attributes that will work. After all, nearly all skills can be taught on the job.

If you’re thinking more of future planning and reducing recruitment costs in the long term then definitely look into building and maintaining dedicated talent pools.

Imagine a scenario in which a prospective candidate, is not an ideal match for the current job.

They do however perfectly align with your organisation’s culture, and expresses interest in joining you, so you save their details.

Then, six months later, when a new job opening closely aligns with their skillset, you swiftly bring them on board.

That’s a lot easier, cheaper, and a lot less hassle.

This results in an excellent addition to your team, eliminates the need for additional recruitment costs, and the time taken is minimal.

This method of filling skill gaps is extremely cost-effective and efficient.

That’s why every piece of CRM/recruitment software has talent pool options to allow you to segment, monitor, and address specific candidates.

Saving this kind of time now will make a huge difference in your recruitment costs.

Introduce employee referral programmes

Want to reduce your spend on advertising through   and Reed? We know how expensive these platforms can be.

Then why not use word of mouth?

An employee referral incentive or programme is perfect for cutting costs.

Going to those who already work for you and asking something along the lines of “Who is the best X you know?” will give you a great sense of who is out there.

You already have your employees engaged and advocating for your business by doing this. That alone will save a lot on marketing costs.

You’re also likely to find those that would work well with your team and be able to get up to task quickly.

No one, especially with an incentive, is going to recommend someone who is not up to task.

And a reward incentive is going to cost significantly less than that of hiring out multiple adverts and platforms to sort out your applications.

Saving On Costs Is Continuous

Each of these steps provide a significant reduction in recruitment costs and cost to hire.

Saving time and money you will also be hiring smarter and getting better quality.

Combining multiple elements will help you not only achieve quality recruitment every time but also keep the costs as minimal as possible.

Remember though that recruitment isn’t a “cost”. It is an investment in your staff and in your business.

Take the investment seriously, think about things carefully, and you will see the rewards in both the short and long term.