A Common Misconception of “Cost-Efficient” Hiring
It’s a common misconception that finding a new hire without any assistance from an outside hiring firm is the most cost effective option for an employer. I recently had a conversation with a prospective client on this very subject.
We’d been talking over the last six months about a management position I wanted to help fill, but she kept hesitating on pulling the trigger. During the conversation she told me she had triumphantly landed a suitable candidate herself. “I kept that cost per hire down, didn’t I?” she asked.
I responded, “So how much did you save?”
When taking the Cost of Vacancy (COV) into consideration, I knew she might find the answer disappointing. The COV for a company of their size and revenue level (calculating to their favor based on public information) is $41k per month. This totals to a conservative $246k cost for the six-month vacancy.
Alternatively, Bradley-Morris regularly places candidates into the same type of management position in the same location within 2-4 weeks. Although there are fees associated with contingency recruiting services, in the long run those fees are a small fraction of what the potential COV could be.
Furthermore, in this prospective client’s particular case, the position she was searching for was for a new branch within a new territory. The competition had plenty of time to respond and execute its own counter initiatives. An opportunity to get a jump start was missed.
In some ways the new hire she found was at a disadvantage because they entered into a new role that had been inactive for six months. This often results in internal frustration because existing employees were responsible for performing extra work, which can cause individuals to lose their focus and drive. Productivity and the bottom line can suffer by stretching an employee too thin. Also, when a department is understaffed, it’s not uncommon to start losing customer loyalty due to a mediocre service/product.
Another factor to consider when evaluating cost efficiencies of hiring is the return on hire. At six months into the search, with the competition fortifying and overworked employees becoming more disgruntled, it is likely the company has settled for an adequate candidate. Unfortunately, getting the position tolerably filled is not the same as the excitement and relief of adding a top-performer to the team.
So, how much would your company save by partnering with a recruiting firm like BMI as opposed to filling a position on your own? The cost of vacancy would be significantly lower and the return on hire could be evidenced in the customer loyalty spurred by outstanding work ethic and dedication.
At Bradley-Morris, we work in parallel with some of the world’s best talent acquisition teams. We know the metrics and the competitive landscape. Our employees are experts in providing highly-skilled and flexible candidates that fit a wide variety of employer needs nationwide. We ensure our clients are always the winner when it comes to cost efficiency and placing proven performers so, when asked the value gained by utilizing our services, the answer is an easy one.
Bobby Whitehouse
http://www.linkedin.com/in/bobbywhitehouse
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