We all know that hiring and recruiting can be an expensive cost for any business — both in terms of time and money. The average cost of recruiting a new employee in the U.S is $4,000, and the cost of bad hire is estimated to be 30% of the first-year salary.
Knowing how high the stakes are, it’s important for employers — especially small businesses — to make the right hire the first time.
Here are some more of our suggestions to help you and your business cut the cost of recruiting new employees.
1. Establish an employee referral program.
Recently, CareerPlug conducted a recruitment metrics study of more than 12,000 companies. We found that one of the best sources of high-quality applicants for employers in all industries surveyed is referrals.
In fact, 16.7% of applicants from personal referrals became hires, whereas only 1.3% of applicants from job boards became hires. In our experience, an applicant who is referred to a job is much more likely to be excited about the position and to be a good match, while applicants who apply from job boards are more likely to be sending out dozens of applications in short order, with less consideration for their qualifications or their interest in the specific company.
Studies also show that referrals tend to result in a lower turnover rate and increased employee morale.
The cost associated with employee referral programs tends to come in the form of cash bonuses or other rewards intended to incentivize employees to help recruit on your behalf. However, offering a bonus of a few hundred dollars can often be a welcome price tag to business owners who would otherwise spend thousands more on other recruitment marketing expenses that may not even result in the high-quality applicants they want.
2. Streamline your hiring process.
Big companies often come with big HR departments dedicated to hiring and recruiting. But what if you’re a small-to-medium business owner without the HR resources of a big company?
These small-to-medium businesses can benefit most from streamlining their hiring process because they have less time, money, and attention to devote to recruiting, hiring, and onboarding. After all, they have a business to run!
Consider investing in an applicant tracking system to help you eliminate paperwork, save time on administrative tasks, automate communication with applicants, pre-qualify candidates with assessments, and accelerate hiring decisions.
You could also take advantage of technology to make your interviewing process more efficient. We’ve seen more businesses adopting remote hiring methods during the COVID-19 pandemic as a health and safety measure, but these methods have the added benefit of increased efficiency:
- More extensive phone screenings
- Pre-qualification questions and assessments
- Online video calls in place of in-person interviews
A streamlined hiring process can get the right people in your roles fast, saving you time and money.
3. Write compelling job postings.
Job seekers are busy people too, and the best candidates will only invest their time in applying to roles that sound enticing. Your job posting should be clear and bold in presenting the value you are offering. Taking a little time up front to update the copy on your job postings is a great low-effort, no-cost strategy that will save you time and produce better results in the long run.
Start by choosing a relevant job title. Avoid using quirky terms like “rock star assistant,” “sales ninja,” or “marketing guru.” Ask yourself: What keywords would an applicant for this role search on Google or job boards? It’s important to optimize your job title for search because the title is what people will click!
For the content of your job post, put your business’s best foot forward and show off your employer brand. What can you offer candidates in terms of growth opportunities, professional development, benefits, perks, and company culture that your competitors can’t?
Potential employees are looking for something more than a rudimentary job description composed of a few bullet points. They’re looking for a story and core values as well. Your job ad should communicate these and entice job seekers to want to hear more about the role.
Interested in learning more about how to write compelling job postings? Check out the video below featuring CareerPlug’s Senior Director of HR, Natalie Morgan.
4. Keep a talent pool on file.
Once they’ve filled a particular position, too many employers tend to forget about all the other applicants. This can be a mistake, as some of these applicants might potentially make a good fit in the future.
If you’ve attracted strong candidates who were your second or third choice for a certain role, don’t lose their resume! Let them know that you’ll keep them in mind for future roles. Many hiring managers already say this to candidates they don’t end up hiring, but make sure it’s not just lip service — you should actually keep them in mind for future roles.
Our advice: Always be hiring. The wrong time to start hiring is when you needed a person in the door yesterday. You might not need to hire someone today or tomorrow, but you never know when a great employee might leave.
By always keeping a lookout for top talent, you can maintain a hiring pipeline. When you’re in a bind, you have someone to call without starting the recruitment process over from scratch and waiting for new job board applicants.
Applicant tracking systems can help you archive and organize all of the applications you receive for your roles. You can search for your favorite candidates at a later date and send them an email or text message in seconds.
5. Increase employee retention.
The best recruiting strategy is retention. It can cost a business up to 33% of an employee’s annual salary when an employee leaves. But other unseen costs include:
- Opportunity costs — How much could your business have grown if you kept your team together?
- Culture costs — How will the departure of good employees impact the rest of the team? When you lose employees who make positive contributions to your culture, what happens to your culture when they take those contributions elsewhere?
One low-cost way to increase retention is to increase employee engagement — a measure of how invested your employees are in their work and the organization.
Show employees recognition and appreciation, provide opportunities for team building and virtual learning to expand their skill set, solicit feedback from everyone on your team, and make sure you’re communicating growth opportunities to your top performers.
But perhaps most importantly, give your employees a sense of purpose in their work. A 2017 Gallup study found that when employees have a sense of purpose in their work, their engagement increases exponentially. Employees who said they can link their individual goals to the organization’s goals were 3.5 times more likely to be engaged in their performance.
The downside is that only 44% of those workers polled said that they can actually see these connections. You can put your business at a significant advantage in terms of retention if you can connect people’s work with a greater purpose.
Recruiting will always have some cost — in time, money, and effort. But by being strategic about how you spend your valuable time, money, and effort, you can end up making better hiring decisions. And by making better hiring decisions, you can retain your employees longer, making your business stronger overall.
About the Author
Sunny Dhami is the Senior Director, EMEA Product Marketing & GTM for RingCentral. He has extensive Marketing experience across SaaS, Telecommunications and Technology sectors within companies such as Vodafone, Reed Elsevier, Calor Gas and SapientNitro. Sunny has also written for websites such as Hubspot.