Recruitment - an expensive business
•It should be noted that the costs of time and lost productivity in hiring a wrong employee can easily reach 150% of the employee’s annual compensation figure.
•Some of the main factors you and organizations need to consider when calculating the cost of recruitment are mentioned below :
Departing Employee :
Temporary cover for vacant post and lower productivity
Administration costs for departing employee – payroll, pensions, etc.
Lost skills and investment in training
Loss od goodwill from customers
Possible downturn in morale of remaining employees
Recruitment and selection :
Manager’s time spent analysing the vacancy and specifying the job
Time spent in briefing/working with external agencies
Direct costs of working with external agencies
Direct advertising costs
Administration costs – sending out job information, letters, arranging selection events, etc.
Manager’s time – shortlisting, interviewing, selection, taking up references
Training costs – ensuring everyone has the necessary skills to recruit
New employee :
Induction and job skills training
Manager/employee’s time spent in orienting new person
Administration costs of new employee – payroll, pensions, etc
Cost of the new employee being less than 100 per cent productive for weeks/months
Disruption to the department as the new person gets up to speed
Cost of any new equipment such as company car, mobile phone, laptop, etc.
Hence, the need for Recruitment Vendors :
•Companies can purchase CareerBuilder posting and screen the candidates themselves.
•But, the reason why they hire staffing partners is to perform activities they can’t internally.
•Usually the recruitment agencies have the depth in their recruitment process, which the companies cannot perform.
•Moreover outsourcing is cost-effective.