Saving money on recruitment-do it yourself!

Depending on what literature you read, the cost of replacing an employee can run from half to twice the employee’s annual salary. The more senior the position and more complex the role, the greater the cost.

Costs associated with an employee’s departure and backfilling the position traditionally fall into those categorised as direct and indirect. Advertising the vacancy, time spent in recruiting, separation/termination payouts, loss of productivity for other employees while they fill in for the vacant role, induction and onboarding, training in the new role, time to come up to peak productivity are all direct and indirect cost factors that add to the expense of losing (and replacing) an employee.

Often such costs involve payment to a recruitment agency to present candidates for the vacant position. Market rates for recruitment varies but 15% to 30% of the salary package for a placement is not unusual. At a ballpark, you generally don’t get much change from $15,000 should you elect to use an agency for replacement of a mid-level skilled employee.

Truth be told, while good recruitment is a skill, much of what an agency does is able to be replicated by a business owner with the guidance of an experienced HR professional. Here’s a few items to consider:

• Consider learning the recruitment process for yourself. The basics are not difficult and, once you know how, you reduce or eliminate your reliance on agencies in filling your future vacancies. A good senior HR Consultant with recruitment experience can show you Recruitment 101. At the very least, this will show you what level of commitment and cost is required to recruit effectively in-house.

• Think about your recruitment strategy in reverse: the most effective way to minimise recruitment costs is to reduce the number of employees leaving your business in the first place. Take the time to recruit the right person, have an effective employee retention strategy, be aware of the full costs of employee turnover and communicate this to all managers within the business. There’s a plenty of simple employee turnover costs calculators available on the internet to assist you in identifying cost factors relevant to your business.

• If you absolutely must use an agency for recruitment, negotiate their fees. If they really want your business ask them to demonstrate their commitment by having some skin in the game. Ensure you’re fully aware of what you’re paying for (such as a commission on total salary package) and negotiate on salary package components such as base salary only, flat fees and/or extended candidate guarantee periods. Best yet: a full refund if the candidate doesn’t work out. Watch their reaction when you ask for this!

Bare Bones Consulting is not a recruitment agency. We are experts in HR with prior recruitment experience and can show you the techniques to recruit like a pro…getting the right person first time. From entry level to executive, we can assist in attracting the best people to your advertising, guide your interview and selection process and introduce you to online personal assessment tools for the perfect candidate fit. There’s no rocket science behind our approach; it doesn’t take a huge investment in time to see genuine improvement in most recruitment processes and, once you know how to recruit effectively, you’ll recoup your Bare Bones expense time and time again.

You can also obtain some great tips on Hiring Employees through the Fair Work Ombudsman’s Online Learning Centre at:

http://fairwork.cls.janison.com/Auth/Login?ReturnUrl=/