With the economy recovering, and companies starting to think about growth, it's the perfect time to offer 7 tips you can use to reduce the money you spend if you are hiring.
These tips are not a "one size fits all" approach to recruitment, and I wouldn't recommend attempting all of these together, certainly without help. Hopefully they'll give you some ideas and get you thinking in ways you may not otherwise have.
1. Stop using recruitment agencies.
All recruitment agencies aren't created equal, and you should consider this point (indeed, all of this advice) based on your own situation, but this is about saving money and agencies are by far the most expensive source of candidates.
When you use recruitment agencies, you set the skill, experience and salary levels, write the job spec (and therefore their advert), you sort CV's and you interview. The only bits the agency does are search for candidates and negotiate salaries.
To be fair, sourcing candidates is the most time consuming aspect of the process, but when you consider that it's just one part of that process, the question you should ask is "does this justify the fee?"
When you consider that over 80% of UK Jobseekers found their last role on-line, and the average job board advert costs under 500GBP, compared to the average fee within IT Recruitment of over 9,000GBP, the numbers don't add up.
On-line job boards also simplify the agencies job, which makes it all the more surprising that companies are prepared to pay upwards of ten grand for someone to find CV's!
Other options are to search for candidates yourself. This is the most time consuming option, but also the most cost effective. And with a bit of planning, it's not that tricky. If you've got a job spec you can create an advert and with a simple spreadsheet set up in advance, filtering CV's doesn't have to be difficult. Of course, this doesn't have to mean you personally! Anyone from HR or admin can find good CV's if they know what to look for.
There are on-line only recruitment companies of which you can find plenty on the internet. For a low fixed fee, they will advertise on several job boards and search on-line CV databases. The upshot, in theory, is that you receive CV's of several candidates that can fulfil your role. The main drawback is at the price they charge, you shouldn't expect too much advice or support, and whatever they say, the blanket approach doesn't suit all roles. It's cheap, and we are talking about saving money, but its called budget recruitment for a reason.
The most under-used method is to recruit internally, and I'm including referrals from internal staff here. Recruiting from your employee base is free, and you can't get much cheaper than that. Regarding referrals, this is something that you should actively encourage, and even reward your staff for. A lot of companies offer this, but don't utilise it, and they're missing a trick. This be your employee's friends, but you should encourage them to approach their wider network of contacts, via sites like Facebook, Twitter and LinkedIn or even forums related to their role. You can offer your staff an introduction fee and it's still considerably cheaper than using an agency.
2. Stop using recruitment agencies.
Now, I'm cheating a bit with the same heading twice, but this is a completely different reason for the same action; that agencies go out of their way to push your costs up.
One of the benefits of agencies I'm often quoted is that you instruct several agencies to resource your role, but you only pay the one that finds your person. This is a worthy benefit, but is negated by the fact that you'll pay that agency significantly over the odds. This is accentuated by the fact that agencies are paid on the outcome of their efforts rather than the service they deliver. This means that they will do whatever they can to make a placement, and at the highest salary level (and therefore fee) possible.
You may have experienced a situation where you've asked a candidate in interview how much money they want and they reply that all negotiations have to go through their agent. This is what agencies tell them to say so the agency can negotiate the highest salary they can get. I find it strange that an agency that YOU are paying (so are working for YOU) will go out of their way to make YOU pay more. I don't know about you, but that doesn't strike me as being in your best interests!
Of course, you can employ agencies to source candidates, and insist that all salary negotiations are carried out by your company. The agency won't like this and will give you reasons why it wouldn't work ("We know the candidate better"; "We know how low they'll go"; "We're experts in negotiating salaries and will get you a better outcome"; and many more) but all they're trying to do is make you pay a higher salary and therefore a higher fee. These may be valid points, but none of them are things you can't discuss with a candidate - especially one you're looking to hire. The candidate may even be more open with you because they won't feel you're trying to get leads from them; another agency tactic I won't go into here.
The important point to remember is that agencies only get paid when they place someone with you, and the more money that candidate gets paid, the higher their fee, so bear that in mind when you are negotiating with agencies.
3. Prioritise your search criteria.
It's very easy when writing a job spec, especially when you've always used agencies, to feel as though you should aim for the perfect person. It's as if the "ideal candidate" will justify the massive fees! This lack of priority leads to large numbers of unsuitable CV's, lots of unproductive interviews and a long and demoralising recruitment campaign. It may also mean you start looking at more expensive candidates, purely because they have all the skills you're looking for.
If you want to save money and a lot of time when recruiting, then you must prioritise the skills you require.
This is very easy; all it requires is to decide what the most important aspect you require is; the second most; third and so on. Then ensure you let your head rule your heart when you are looking at CV's and interviewing candidates. This, when done correctly, will save you a lot of money and it must be done in conjunction with...
4. Make compromises.
You've prioritised your search criteria, and know exactly what you're looking for in your "ideal" candidate, as well as your priority skills, now you need to set your tolerance levels; which skills you're prepared to compromise on and by how much.
When you are reviewing CV's, interviewing candidates and selecting the one(s) you want to hire, you need to ensure you stick with the criteria you set out at the beginning of the process.
If you're prepared to compromise on some of the secondary skills, the salary level will be reduced. Obviously, you may not get your perfect candidate, but you'll certainly get someone who can do the job, probably to a more than acceptable level, and you should see a substantial cost saving.
5. Turn to training.
This is present in other forms within most organisations, maybe succession or workforce planning, or indeed personal or career development, and it can be used effectively when you're actively looking to hire. This is an area that may take more planning but can save you considerable amounts of money in the long term.
Put in its simplest form, the best way to save money on recruitment is not to recruit at all.
You may be surprised how much cheaper it is to train someone to a good level in a specific skill than to hire someone who already has that skill and has used it in a relevant project. This can be incorporated into your recruitment planning in more ways than one.
Firstly, you can promote from within and train that employee to do the job you were going to recruit for. This may mean you need to recruit someone to replace that employee, and if this can't be done internally, you may need to look externally, but it's a lower level role, so will be cheaper.
Secondly, you could recruit someone with just some, or none, of the specific skills that you're looking for and train them up. There is a very strong argument that it's better to recruit someone who fits your team or company culture and train them in the skills they need, rather than recruit someone who is skilled up but doesn't fit in. Recruiting someone with less skills and/or experience than you need is obviously going to reduce their salary.
There is the argument that you'll train people up and they'll leave for a higher salary, but this is a risk that can be reduced through effective management and retention or workforce planning.
6. Contract recruitment vs. permanent recruitment.
This is a sensitive subject, but I believe it's a great way to manage your budget - if done properly. The way to manage this is to be completely realistic about your project length, and the specific role that each individual is going to play within each project - from the outset.
The two most common situations I see regarding this is when a contractor is hired for a specific part of a specific project, which they complete, then start working on the next stage, or another project, because "they can help" or "they have skills that will enhance the project's outcomes", but this is where a six month contract turns into two years, and that's when you spend a fortune. What happens is the contractor gets embedded into the project or company and the management team forget that the project can continue very well without that individual. It can be a difficult situation to manage, and can happen easily if a project is over-running, but careful use of contractors is essential.
The second is when a project needs an injection of skills to get it to the next stage, or for a planned stage, and a permanent person is hired. This is normally because contractors are seen as a huge expense that should be avoided at all costs, and this mindset can have serious consequences on your budget, and timescales. It's difficult to give examples, because every situation is different, but it is certainly worth considering a contractor when you have a set piece of work to carry out. It may appear to be an expensive way to get work done, but in terms of an annual budget, especially when you include tax, NI, pension, holiday/sick pay and other benefits then using a contractor will frequently save you money - and time in the actual recruitment process.
7. Shorten your recruitment process.
This final point relates to indirect costs - the time it takes you and others within your organisation to carry out recruitment tasks. Time spend not doing your job is a substantial cost, if followed through, and taking less time to hire is one way to ensure that individuals can get on with their jobs rather than spending time interviewing, or on other recruitment tasks. There are several ways that this can be done...
Delegation is the first way to shorten the process, at least for the more senior people involved. The easiest way is getting subordinates to filter CV's. If you receive 30 CV's for one job, around 29 of them will be rejected. Surely there are certain criteria that someone less senior than you can look for that may eliminate the first 10, or even 20 of those, meaning that you only need to look at 10, rather than 30 CV's.
The same goes for interviews. Most people that you interview will be unsuitable for the job because of something fairly obvious, usually established quite quickly. Does the most senior person on the team therefore need to be involved in the first interview, or even the first part of the first interview? If you're involved in 5 interviews rather than 10, how much time will you save?
Another way to save time stems from points 3 and 4 above. If you set skills you need, and others you can compromise on, it's a lot harder to get dragged into discussions over candidates with skills away from your key criteria. I've seen it numerous times when a candidate with very few of the key skills still attracts interest because they have another skill you think may help the project. The key is to remember what you are recruiting for now, and not get distracted. That person may be suitable at a later date, and you can discuss that with them, but you should also continue your search for the person you need now, and not let that get delayed. It's another tricky one to manage, but discipline in setting and adhering to criteria will really benefit you here.
Finally, - and depending on your circumstances will have varying impact - is the approval process. Once a budget has been agreed for recruiting a new person, it has been agreed! Why then, once you have found the person you want within the agreed budget, does that person need to be interviewed several times, by people at various levels, and have their application/hire signed off again? This "approval" process can take a long time and not only delays the hire of a person who could already be working, but it also takes time out of the day of several senior people within the company. You also risk losing your candidate altogether and having to start over.
All of points 3 - 7 can be incorporated into your recruitment plan whether you decide to use agencies or not. Any saving that you make from these points will be increased if you do use agencies, because if you pay lower salaries, you will also pay lower agency fees. However, if you decide not to use agencies, you'll already have saved yourself several thousand pounds, and combining the other points will create additional savings.
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