Do you actually save any money when you recruit through low-cost methods?
If you’ve ever tried recruiting through low-cost methods, then you know that there is a time and place for it. Sometimes these low-cost methods are all that is needed to find the perfect candidate. But what if they are not enough? What if your company needs someone with a specific expertise that is critical to the success of your business?
If this is the case, it may be worth investing in an external recruitment partner to deliver a successful appointment. However, before doing so, consider how much money you will actually save by using these lower-cost methods first. After all, every company wants to make sure its bottom line stays in good shape! This article will discuss whether or not using cheaper recruitment strategies really saves any money at all when compared with other options like partnering a specialist and professional recruiter.
What are low-cost recruitment methods?
Low-cost recruitment methods include sourcing the role yourself through mediums like job boards, social media, online advertising, word of mouth, or perhaps even by using a contingency recruiter.
These methods are usually much less expensive than partnering an executive search consultancy or a headhunter but what is the opportunity cost to your business of failing? I can see why CEOs would want to try to recruit a £100,000 role themselves or by using a contingency recruiter if you consider their cost alone next an Executive Search firm. Internally you pay for the salary of your recruiter plus the medium you are using plus the hours your leaders may spend interviewing candidates. If they interview poor candidates then this opportunity cost suddenly becomes significant.
In our world at Collingwood, we have had web enquiring companies pitching our Executive Search services against those of a contingency recruiter, but you are not comparing apples with apples! It is like wanting a Ferrari but only wanting to pay the price of a Skoda. They are of different levels of quality and customer experience.
In terms of cost though you could be comparing roughly 15% to 25% fees for a contingency recruiter against 25% to 30% for an executive search firm. I guess the consideration needs to be around managing risk and assessing how long you are willing to have a vacancy open for or what happens if you actually recruit a poor calibre of candidate due to a lack of professional assessment.
Key points to consider
As for low-cost recruiting methods, they have some drawbacks that you should be aware of.
First of all, using online advertising, word of mouth etc… is like rolling a dice. You are not in control and it could go badly wrong! It could equally go very well and save you the money you want to save.
With contingency recruiters, the main negative to them is the commitment you get from a recruiter that you have not invested in up front. This is particularly true for a difficult role that needs innovation, creativity, and sheer relentlessness to engage candidates for. Contingency recruiters are targeted on revenue and so why would they commit time to a role that will absorb hours, days, and weeks when they could focus on much easier roles that will allow multiple roles to be appointed in the same time that it will take them to resolve your problem vacancy. It doesn’t make financial sense for them to continue with tough vacancies.
If you are going to try and recruit yourself then consider if your internal recruiter has the skills, expertise, network, and time to deliver exceptional candidates in the time that you need them. Also consider if your company has a robust employer brand that will motivate candidates to enter a recruitment process with you. Internal recruiters can’t hide who they work for and the first thing candidates will do is research everything they can find about your company on the web. If they can’t find an authentic story that they can relate to and a company that will deliver their career aspirations then they are dead in the water.
Additionally, the quality of candidates you will find through these methods is usually not as good. Contingency recruiters are often looking for the best deal for themselves and may not be as selective when it comes to choosing candidates. This can lead to problems down the road when the new hire is not a good fit for the company.
How much money can you save by using low-cost recruiting methods?
Unlike purchasing some capital equipment where a company will work out a Return-on-Investment calculation considering the extra capacity the machine will provide over a period of time, companies only seem to consider recruitment as a cost! My opinion is that this is setting you up for making a wrong decision. Yes recruitment costs can look expensive if you look at them in isolation but imagine if you thought about the following scenario. You are recruiting a Sales Director. The role is responsible for achieving 10% annual growth on last year’s £50 million turnover, so £55 million. You decide to use a low-cost recruitment method that fails after 6 months of trying and so decide to invest in an executive search partner who succeeds in 3 months. It is unfortunately too late to deliver your annual target as you will have been without your required Sales leader for 12 months (assuming a 3 month notice period is necessary). You deliver a flat revenue and miss out on the £5 million growth. The c. 30% or £30,000 fee you paid to your executive search partner 6 months later than you could have resulted in your company losing £5 million in lost sales! £30,000 for £5 million revenue!! Is it worth it? Furthermore, what is the cost of your team being leaderless for so long?
I recognise that this is just one possible scenario, but it is a frequent one that we encounter when having to solve a problem left by a poor recruitment decision.
The pitfalls companies face by trying to recruit key roles cheaply
When a company tries to fill a key role cheaply, it can face several potential pitfalls. One of these is that they may not find the right person for the job. This can be due to a number of reasons, such as the fact that many good candidates are already employed and may not be looking for a new job.
Additionally, many companies using low-cost methods like social media or job boards often end up posting jobs that are too general or vague. This can make it difficult for potential candidates to know if they are actually a good fit for the role. It can also lead to a lot of time wasted by both the recruiter and the candidates who apply for the position.
Another issue that companies often face when trying to fill key roles cheaply is that the process can take a long time. This is because it can be difficult to find the right person for the job through these methods. Additionally, many companies do not have the workforce or resources to properly screen all of the applications they receive. This can lead to a lot of wasted time and energy, as well as frustration on the part of everyone involved.
Ultimately, many low-cost methods are a shot in the dark and provide considerable risk to your business.
Why it is important to use an Executive Search or Headhunting partner instead of low cost methods?
When you weigh all of the potential pitfalls companies face by trying to recruit key roles themselves against the benefits, it becomes clear that investing in an external recruiter is a sensible decision to make.
If you want to save money but still find qualified candidates quickly, you should consider partnering a professional recruiter or executive search firm. It may seem like these options are more expensive than using contingency recruiters or looking for candidates yourself, but, as my example above highlights, they aren’t always.
For one thing, professional recruiters focus on finding the best candidates for their clients to save them time. Consequently, they are often much better at matching candidates' skills, behaviours and career aspirations with the requirements of a role. This means it will be easier to find someone who will get up to speed quickly in their new role, which saves you money down the line by reducing unproductive time. It also increases the likelihood of them staying with your business for a longer period of time.
Also, executive search consultants have or can create an extensive network that can help them find top talent more effectively and perhaps quickly. They may have already worked closely with people interested in your type of position before, so they don't need to spend time identifying potential candidates for you.
How much does a good Headhunter cost and what do they offer you as a company looking for talent?
The cost of hiring a good headhunter will vary depending on the market and expertise they will bring to you.. A typical headhunter's fee ranges between 25% and 40% usually based on basic salary but some do base it on the overall remuneration package that you offer the successful candidate.
However, for those companies looking to hire a key role because they can't afford to go through traditional methods, this may be money well spent! Headhunters have experience in many different industries and will search extensively to find candidates who are right for your company. Recruiting employees this way is much more effective than using social media or job boards because you'll be finding candidates that fit your criteria rather than just responding to anyone who applies for the job.
Headhunters also understand the effort, dedication and relentlessness it takes to recruit a key role in your company and will work tirelessly to make sure the process goes as smoothly as possible. Additionally, some recruitment agencies often offer guarantees if you are unsatisfied with their services. This shows that they are confident in their ability to find the right candidate for your company.
Ultimately, using an executive search firm is a smart investment. They can help you save time and money while delivering your strategy and generating revenue. So, if you are having trouble finding the right candidate for your open position, it may be time to consider hiring a headhunter.
There is no doubt that trying to recruit key roles yourself through low-cost methods like job boards, social media, or word of mouth can be a risky proposition. Not only is it difficult to find quality candidates using these methods, but companies also run the risk of wasting valuable time and money in the process.
The bottom line is that if companies want to ensure they have quality employees and leaders to successfully deliver their strategies, they need to start recruiting top players in their industry through professional headhunters instead of low-cost methods. For many reasons, this method will be more time-efficient, and it will ultimately save them money. Going forward, hiring a professional recruiter may just be the best strategy for your business!
For more information about headhunting and how it can save you money in the long run, feel free to check out our homepage. We're always happy to answer any questions people may have!