The true cost of recruiting
Every business needs to recruit employees to thrive and determine how successful it’ll be in the future. Recruiting and retaining the right people is, of course, vital but also a fine balance of return on investment (ROI).
We need the right staff to complete revenue-generating and support activities, but their total costs need to stay within certain parameters to make projects profitable. OK, so that’s a bit of a no brainer but are you across all the costs during the search, recruitment and onboarding processes?
In a post-COVID era, hiring qualified professionals has become more difficult, so make sure you're aware of the associated costs before getting started. As such in this article, we're going to look at the true cost of recruiting, and some of the ways Australian businesses can manage those costs.
If you’re just after our new recruitment cost calculator, no problem, just click below.
What’s the real cost of the recruitment process?
Two central factors you need to consider when calculating the real cost of recruitment are time and money.
Employee time costs
The first significant factor in the recruitment process is employee time. Even before you do anything else, you’re creating job descriptions, talking to HR, looking at business cases, signing off-budget etc.
Even if you’re hiring one new position, it can take a lot of people power to set up, run and onboard the recruitment process. These can include:
- HR teams for search, selection, policy, and contracts
- Marketing and IT staff for advertising
- Legal for staff mobility
- Hiring and or reporting managers to review the applications
- Management for signoff
- Learning and development for onboarding and training
- And internal buddies, mentors, and program managers to navigate probation.
Not every business has access to this amount of personnel, plus, every minute your staff members are working on recruitment, is a minute they’re not focusing on day-to-day and client operations. This can quickly move this area from intangible or tangible, which leads us to…
As well as recruitment resources, you will also need to consider the cost of salaries, fees and on-costs. We need to consider:
- Salary of your new hire, including bonuses, super, and package
- Salaries of extra team members involved in the hiring process
- Internal commissions or referral bonuses
- Advertising and online job board costs
- IT costs
- Shared services costs
- And any agency fees.
These are some of the biggest recruitment expenses and arguably are the easiest ones to identify and price. When you add everything up, the average cost of a new hire can be anywhere between $3,500 to $5000.
The cost of a ‘bad hire’
Even good people aren’t always a good fit for your culture, team or projects, which can be costly. When someone doesn’t work out, and either leaves or is managed out of your business, you’ll have to write off some or all of their recruitment costs and go through additional recruitment processes.
Again, this doesn’t just impact the new hire, it can also lead to lower productivity, lower morale, and could put important projects on hold. The recruitment impact associated with this can be profound for your business.
Mitigate risks and save
Of course, every business wants to save money. And simply put, the best way to avoid unnecessary costs and mitigate recruitment/hiring risks, is with solid systems and procedures across the hiring process. With a few cost-effective strategies in place, you can save your business time and money and still recruit top talent. Consider:
- How are you attracting candidates?
- Are you attracting passive and active candidates?
- Are you working with an external recruiter who truly understands your values, culture and strategic objectives?
- Do you have a recruitment process that covers skills suitability, culture fit and value alignment?
- Do you have an onboarding process and formal management plan which covers the first 6 months of employment?
Working with an agency, like CGC Recruitment, can help here, in terms of managing time, costs and risks.
Many businesses are choosing to use a recruitment agency to help make the process run smoothly and ensure it remains cost-effective. As experts in finding the right fit for a vacancy, we understand that the true cost of recruiting is finding the ideal candidate in a reasonable timeframe.
As you can see, tangible and intangible recruitment costs can add up. So, it’s important to have cost-effective recruitment strategies in place that can save your business time and money.
To calculate the true cost of your next hire, try using our recruitment calculator.
If you need to discuss where you can make saving and mitigate recruitment risks, a conversation with an industry-specific recruitment specialist is a logical next step.
CGC Recruitment is a specialist consultancy with offices in Sydney and Brisbane and we can help. We specialise in helping clients find and hire the best candidates across the construction, infrastructure, engineering, and architecture sectors, at all levels.
For a confidential discussion, get in touch with CGC and talk with one of our experienced consultants.
Images: This article may contain public copyrighted material the use of which has not always been specifically authorised by the copyright owner. We are making such material available to advance understanding of this specific topic, which we believe constitutes a ‘fair use’ of any such copyrighted material. If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use’, you must obtain permission from the copyright owner.
Operations management can be relatively straightforward in a small company; but, things will be a lot different if you’re managing a much bigger one. It gets more complicated when you need everything...Read more
As we look back over the past financial year and ahead to the 2020/21 year, CGC Recruitment is excited to launch our inaugural CGC in Focus Report on the state of Australia’s construction and...Read more
In Deloitte’s most recent Global Human Capital Trends report, their consultants spoke with business leaders around the world and found that finding qualified talent is among their biggest challenges.Read more