• Fiona Thiele

How to manage your recruitment cost better

Eight out of ten large companies are currently running a program to reduce the cost of their HR function and improve its effectiveness at the same time.

Procurement leaders are looking into cost saving and overhead reduction programs. One important area is talent acquisition and recruitment. Transforming fixed cost into variable and reducing overall recruitment spent with allowing an increased quality and time to hire are the main objectives.

When being asked by your CFO how Talent Acquisition can contribute you probably want to come up with a smart concept.

First of all, you want to look into your external recruitment spending. So, how much does your organisation pay for job boards, social media, recruitment agencies and headhunters? Is there room for cost reduction? Just as an example, there should not be an involvement of the most expensive recruitment channel - agencies and headhunters – on more than 10% of all your external positions over one year. If it is – then you know that this is an area you could deliver your first wave of savings smartly and quickly.

In an Recruitment Process Outsourcing (RPO) solution your RPO provider will be taking ownership on this topic and propose this saving target as a KPI. We at Serendi realize for our clients annual savings of between 35% and 70% on the external recruitment cost.

Secondly you want to look into your cost structure. Today’s cost reduction programs driven by finances normally target the reduction of overhead cost. While investments into technology, digitalization and automation are well liked by shareholders, fixed overhead cost like in HR are under close scrutiny. Instead of building internal headcount for your talent acquisition function you can transform these fixed costs into variable cost. With an RPO solution you will pay only according to the number of open positions and only when the goal of your recruitment function has been achieved – the successful closing of an open position. That is what we at Serendi call transactional and performance-based pricing.

And if your business leaders and accounting department agree you could also get the recruitment cost invoiced directly to the hiring departments by applying the root cause principle. A huge block would go away from the general HR budget.

Thirdly – and very often underestimated – you can reduce the cost of attrition through combining the principles of better talent with better hires.

Research has shown that the cost of replacing a leaving employee can be estimated with approximately 50% of the annual compensation cost for this position. If you can reduce the attrition rate within your company through providing the best available talent and performing a high-quality selection process in the recruitment process you can calculate easily the savings through the increase in retention.

Better talent, higher quality, lower cost – agile.

Book here your first consultation free of cost. We could together benchmark your recruitment cost and identify the areas of savings. Our talent advisory consultants are happy to provide you with a first business case.