Effective ways of reducing recruitment cost

In most companies around the world, recruitment takes a huge chunk of the overall operational costs. In fact, according to the International Public Management Association for Human Resources, about 30% of companies spend between $1,000 and $3,000 per hire and 15 % spend $5,000 to $7,000.


Imagine you have to hire 10 or more employees in a year, and those costs can quickly add up.

You need to understand how much recruitment is actually costing your company before you can determine areas that can be eliminated or reduced. Some of the direct costs to recruitment include turnover, HR Administration, job board fees, agency and advertising budgets, onboarding budget and processing costs.


After understanding which areas of recruitment you are spending most money on, you can know which areas you can streamline spending. Here are some of the most effective ways you can save on recruitment costs without sacrificing the talent pipeline:


External Recruitment Agency:


In today’s modern world, Companies should start working with external recruitment agencies rather than building their own in-house recruiting team.

we’ll highlight everything your company should know when deciding why this option is best.


Sales Focused:

One of the first things you’ll likely notice when working with an agency recruiter is their aptitude for sales. Since their main goal is to generate revenue for the agency, they tend to focus on selling their services to both hiring companies and candidates. They’ll likely welcome your company as a client without reservation and promise they’ll present you with an array of talented professionals you can consider hiring. Agency recruiters also bring that same confidence to their conversations with candidates by saying your role is an excellent opportunity that will elevate the person’s career.


Rapid Process:

Agency recruiters move fast. They want to help your company fill your role so they can get paid and move on to the next position. In some cases, they’ll even have a database of candidates ready to be contacted so you can skip the sourcing stage and get right to interviews. They’ll likely present you with a few different candidates soon after you enter into an agreement with them and encourage you to hire someone from that group.


Technical Understanding:

Many staffing firms specialize in hiring for particular jobs. Their understand exactly what skills are required and know how to identify candidates with the right backgrounds. This knowledge allows them to move quickly since they don’t need to spend much time learning what the hiring manager is seeking. Working with the right recruiting agency can be especially beneficial when hiring for technical roles and difficult-to-fill positions where qualified candidates are lacking.



A recruiting agency is almost always less costly. Pricing schemes can differ from firm-to-firm but most charge a percentage of the newly hired employee’s salary. Additionally, you can work with a recruiting agency on an as-needed basis. You’ll only be charged when hiring takes place and you can move on if the recruitment firm doesn’t meet expectations.

However, an in-house recruiter is an employee like any other. You’ll have to pay them a salary and provide them with benefits, even if they fail to close the position.

Recruiter on Lease

You can employ a part-time recruiter or a contractor recruiter if your company doesn’t have the funds or need for a full-time employee. You can borrow a dedicated recruiter as per the need for specific duration.

When to borrow a Recruiter –

  • You need to fill a position quickly and don’t have time to source, screen and interview multiple candidates.
  • Your company is hiring for a technical or difficult-to-fill position and needs a recruiter with a deep understanding of the role.
  • Your company hasn’t yet defined its culture and is only concerned with skills and experience when hiring.
  • You can’t afford or don’t need a full-time in-house recruiter.


Reduce time to hire

In theory, when you reduce time to hire, you reduce the cost per hire. For faster recruiting your hiring team can agree on the job ad or description before it gets posted, and use technologies like video interviewing, consolidate first round and assessment interviews, and have managers assist in the hiring process earlier on.

By reducing time to hire, you are also creating a much better candidate experience, which your potential hires will greatly appreciate.


Hire great candidates the first time

If you hire great employees on the get-go, you can save a lot of time in finding a replacement in the future and just focus on how you can retain them. With the price of each lost employee slated running as high as 150% of annual salary, increasing on retention can assist in containing recruitment costs.

According to Paul Slezak at RecruitLoop, thousands of dollars per year can be drained from your budget with low staff retention rates. The costs don’t just come from direct expenses associated with hiring a new person but also in the loss of productivity around the resignation, rehiring and retraining processes, he added.


Offer a competitive salary package

It’s good to offer a competitive salary package right away so you don’t waste man hours by forcing recruiters to negotiate and re-negotiate with potential candidates.

Adding flexibility into your compensation ranges may increase offer acceptance and allow your recruiters to nab their first choice every time (which may reduce time to hire and increase retention respectively).


Boost your employee referral program

Studies show that employee referrals are among the most qualified, quickly hired and the easily retained candidates overall. HR software like Firstbird can ensure that you are implementing an efficient employer branding, employee referral program, and sourcing functions.

By having an employee referral program, you can empower your own employees to become brand ambassadors and recruit great candidates for your business. They can share your jobs on social media for you, saving you a lot in terms of advertising costs.


Recruitment can be a costly activity for companies and by using cost-cutting ideas like those listed above, you will not only save your organization money but create additional efficiencies and value within your recruiting function.



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