April 25, 2023 | In the News
Don’t Wait For A Recession To Implement These 5 Cost-Effective Hiring Approaches
We’ve made it through the first quarter of 2023 without a recession, but companies continue to prepare for the unknown by cutting costs. Unfortunately for HR professionals, hiring is often one of the first areas to take a hit when budgets are tightened. In fact, a survey by CFO.com and Wakefield Research showed that 61% of business leaders expect cuts to hiring or retention program budgets in 2023.
If hiring expenses are on your mind, the good news is that you don’t have to resort to hiring freezes, wage reductions or layoffs to stay within budget. Here are five ways to recruit more efficiently and cost-efficiently, no matter the economic environment.
- Dive into your data and set benchmarks.
Cost-effective recruiting starts with some simple calculations, such as your average cost per hire. According to the Society for Human Resource Management (SHRM), the average cost per hire is around $4,700; however, some experts believe that cost may be as much as four times a position’s salary, depending on which types of expenses you consider.
To determine your average cost per hire over a given time frame, add up your total external and internal recruiting costs, then divide that number by your total number of hires. External costs include advertising (e.g., posting ads on job boards), third-party recruiter fees, recruiting events (e.g., job fairs), technology and recruiting software, and candidate-related expenses (e.g., travel or relocation, assessments and background checks). Internal expenses comprise the salaries of your HR team, employee referral bonuses and incentives, interview costs, fixed costs (e.g., office space and utilities), signing bonuses and onboarding and training costs.
Other recruitment KPIs may include time to fill (how long it takes to fill a position, starting when you first post a job) and time to hire (how long it takes to fill a position, starting when your eventual hire enters your recruitment funnel). Whichever metrics you track, using them to set benchmarks can help you stay within budget, easily identify where you can improve and make smarter decisions.
- Focus on candidate quality over quantity.
Receiving a flood of applications is exciting, but less can be more, especially when you’re being mindful of costs. More responses mean you’ll spend more time and resources reviewing applications. Prioritizing applicant volume may also cause you to miss out on top talent. If you get a five-star candidate, don’t wait until you hit a certain quota before reaching out.
A quality-over-quantity approach means being strategic about where you advertise your jobs. Industry-specific or professional association job boards enable you to zero in on the type of candidate you want. (Full disclosure: I work for an industry-specific recruitment platform, but there are many options in this space.) You might also use prescreening questions in the initial application to narrow your talent pool. And remember to optimize the ad itself—“sell” the position to your ideal prospects by highlighting why the candidate would want to work for you instead of the competition.
Additionally, listing the salary range for a position in your job ad saves time, as candidates who aren’t aligned will self-select out.
- Lean on current employees to help recruit.
Happy employees can double as brand ambassadors if they are willing to speak highly of your organization, your culture and what it’s like to work for you. To recruit more efficiently and cost-effectively, encourage associates to identify people in their networks who might be a good fit for your openings and make referrals. There’s no cost to this method, but you may want to offer a cash or PTO bonus for referring an eventual hire.
Your employees can also help with passive recruitment and employer branding. For instance, ask staff members to provide testimonials and share them across your social networks, career pages and other recruitment marketing materials to convince prospective employees to apply.
One final note on referrals: Don’t forget DE&I—encourage your employees to refer people of all backgrounds.
- Build and maintain a strong talent pipeline.
A talent pipeline is a set of candidates who could fill future positions. These candidates could be “silver medalists” who weren’t chosen for another role, referrals that didn’t fit an opening at the time or individuals you found in a résumé search database. Pipelined candidates might also include “boomerangs” (former employees) and current employees who are eligible for a promotion, could be moved laterally or trained in a different area (I’ve written before about the pros and cons of internal recruitment).
Before spending extra recruiting dollars on advertising a position or working with a staffing firm, go to your pipeline. Are any of those candidates a good fit? If so, you may experience a faster time to hire and reduce internal and external costs.
It’s crucial to keep in contact with your talent pipeline. Engage them with updates about your company and check in to see how they’re doing so they maintain a positive impression of your organization. That way, when you’re ready to hire, they’ll be more receptive to your outreach.
- Invest in retention.
One of the most effective ways to reduce hiring costs is by investing in retention. When top performers leave, you incur costs associated with hiring and training their replacement; plus, you face lost productivity and low morale among remaining team members. Focusing on keeping the employees you have will help you avoid costly turnover that only creates more positions to fill.
Although retention (which I’ve also written about) can come with its own costs, like providing competitive salaries, benefits, bonuses and professional development opportunities, it pays off in the long run. Plus, some retention initiatives are low-cost or free, such as offering more flexibility, growing relationships across teams and holding stay interviews.
Even if a recession never arrives and the labor market holds strong, there’s no need to wait to embrace these cost-effective approaches to hiring. Anytime you can attract and retain a top-performing employee without breaking your budget is a win for HR and your business at large.
Let's Work Together
For media inquiries, email email@example.com. For all other inquiries, including requests for proposals, or to speak with a member of our staff, please fill out our form.
© 2022 Wakefield Research