Finding the right people to ﬁll empty positions within your organization can be costly and time consuming. The hiring process can overwhelm all other company goals, especially if the skills criteria are specific and difficult to locate. Since the end of the Great Recession, the job market has been saturated with job seekers.
According to the U.S. Bureau of Labor Statistics, there were approximately 3.3 million job openings and 13.1 million unemployed workers by the end of 2011. With that many job seekers, HR managers are inundated with applications, inquiries and resumes the moment a job is posted. Sorting through these applications is a huge time commitment, and that is just the first of many steps in the hiring process.
When additional employees must be hired in order to handle business expansion, a hiring manager/HR manager usually has two choices. The process can be either handled “in-house” or through a partnership with a reputable human capital resource firm (i.e. staffing firm). Many managers prematurely reject this last solution, believing that the fee paid to the staffing firm to be cost prohibitive. However, this is simply not the case, for the cost to hire a new employee independently has additional obscure costs that are difficult to quantify.
The fundamental decision to manage the hiring process internally or partner with a reputable firm comes down to one main issue – cost. However, thinking of “cost” as a one-dimensional, tangible metric that only encompasses the cost of items such as:
- online job postings
- luncheon/dinner interviews
- travel expense reimbursements
will not give an accurate picture of the total cost of the hire. Time, expended resources, and lost productivity must also be taken into account. Done properly, the hiring process is very task-oriented, and utilizing the expertise of a professional human capital resource firm will eliminate the costly investments associated with those tasks. In business, time is money.
So, when considering the cost to hire a new employee, it’s important to quantify and include the total cost of your internal staff’s time in all analyses.
After conducting a cost analysis on their hiring processes, most small businesses choose to partner with a reputable staffing firm. Below are some of the basic costs that need to be considered:
- Sourcing Costs – costs incurred during the search for candidates. These costs may include fees for print ads, online job boards/social media ads, employee referral pro-grams, job fairs, etc. All these costs are eliminated by tapping into a staffing partner’s network of quality candidates.
- Screening Costs – costs (in both hard dollars and time) that the internal administrative staff expends to open, respond, and route resumes to the hiring team. Just how much time does your staff person spend screening resumes? According to CareerBuilder, 40% of HR managers receive over 50 resumes for every available job posting. That is a lot of resumes to screen, sort and pass on, so it is important to analyze how much time is spent processing them.
- Preliminary Interviewing Costs – costs wrapped around preliminary phone interviews and the cost to have internal staff prepare, conduct, summarize and communicate the results of those interviews.
- Interviewing Costs – includes the cost of reimbursed travel to and from the interview, time spent scheduling interviews and the actual time involved (for all employees) in conducting the interviews. It is important to note that, especially with first-round inter-views, the company actually pays their employees to take time away from their core responsibilities to interview candidates, most of whom are not a good fit.
- Testing Costs – costs for pre-employment tests to help assess a candidate’s skills, abilities, aptitude, attitude, values and behaviors. These costs also include any software subscription fees, per-test charges, and employees’ time to administer these tests.
- Hiring Costs – includes the time and cost for follow-up with candidates during negotiations and to notify those that were not selected. In addition, there are (perhaps) relocation fees, background checks, reference checks, and drug screens.
Not every new hire will incur all these expenses. However, this list reveals that the costs of hiring a new employee can be much more expansive than they appear on the surface.
Some hiring costs are variable. This means that they can rise and fall depending on
- The length of time it takes to fill the position. t takes (on average) 8 weeks to recruit, screen, interview and hire a new employee. During this time, workplace productivity will suffer, since other employees have to fill the “gap” left by the exiting worker, usually with no knowledge of the processes involved and with little training. Therefore, it becomes urgent to recruit and hire the new employee as quickly as possible..
- The level of satisfaction that management has with the new hire. Hiring the “wrong” person can cost anywhere from 1.5x to 3.5x (or more) of that person’s annual salary. A staffing firm provides qualified, pre-screened candidates which reduces the need to “start all over again” with a new hiring process.
It is a significant investment of money and resources to internally implement the hiring process. Partnering with a trusted human capital resource firm, like Snelling, allows you to focus your time and resources on the core aspects of your business, while we manage your search for qualified candidates. You only review the ‘cream of the crop’; this means you do not have to allocate precious time to sorting through vast numbers of resumes from unqualified candidates. No more ad-hoc sourcing costs and fees; with Snelling, you benefit by taking advantage of our carefully screened, real-time network of qualified candidates.
Snelling Direct Hire provides you with a simple service – connecting the right people with the right work – that yields huge returns. Let us play a vital role in your talent management strategy by helping you match skilled, qualified candidates with the work that you need done to accomplish your organizational goals.
If you are interested in learning more about Snelling’s direct hire solutions, find your local office where our industry experts can help you with all your staffing needs.