The Cost-Effective Choice? Why Recruiting Through an Agency can be Cheaper Than In-House.
The Cost-Effective Choice? Why Recruiting Through an Agency can be Cheaper Than In-House
We know. We hear it all the time. Usually bosses of companies stating that they can’t afford or don’t want to pay a recruitment company, so the company should just recruit the new hire themselves, in house. Now you might imagine that as a recruitment consultant ourselves it’d be only natural that we’d argue the opposite. (But please do read on, and hear us out! And we’ll try to explain WHY that is usually a BAD idea…
Searching Far and Wide:
There’s two ways in which recruitment agencies are specialist. Firstly, of course, as experts on the recruitment process itself and its demands; and secondly, as leading sources of insight on how the job market specifically interacts with a particular field, such as marketing, engineering, or in our case, accountancy and finance. Expertise, extensive networks, and access to a wide pool of candidates streamline the hiring process. Recruiters possess the know-how to effectively identify, screen, and present qualified candidates, significantly reducing downtime. But more importantly, recruiters are sitting on a treasure trove we like to call the passive market.
Only 20 percent of professionals willing to move from their current job are actively looking for a job on the market. The rest of them- a huge 80 percent- are passive candidates. These are the people that, while impossible to find or know simply by logging into LinkedIn, recruiters stay in touch with throughout the years. They know their interests and priorities and understand the kind of role that would always make them turn their heads. Engaging a recruiter can give you a direct entry line to talent you would otherwise not be able to access.
Free Branding and Advertising:
Recruitment agencies have established relationships and memberships with a number job boards, online platforms, and industry networks. Beyond access to a wider network of candidates, this means agencies can effectively promote your job openings at a lower cost than if you were to set up with these job boards and groups yourself and advertise independently. In-house recruitment often involves spending significant amounts on advertising and sourcing tools, which can add up over time.
Branding wise, dedicated spaces for information about your business and team engage the candidate far more than a simple job description. In fact, candidates are almost twice as likely to apply when a job highlights an employer’s branded content. Recruiters are experienced in creating the kind of content that candidates are looking for, and can even advise you on your vacancy branding strategy.
Game-changing saves on Administrative and Operational Costs:
Recruitment involves a multitude of administrative tasks, including screening CVs, conducting interviews, and coordinating schedules. These activities require dedicated HR personnel (who often have hundreds of tasks on their plate already), resources, and infrastructure. Engaging a recruitment agency transfers these administrative tasks to the agency, allowing your internal team to focus on core business functions.
In an increasingly global job market, experience managing international talent, right of work, and all the additional admin that comes with that is another thing you need to think about when recruiting. Interacting with candidates every day means recruiters have those experiences, and agencies themselves absorb the costs of checks associated with this.
If we’re talking interim roles, this arrangement has an even bigger impact. Employees that join you on a day-rate don’t even have to be enrolled on your business’ payroll. All employee management is carried out by the recruitment agency, freeing up even more resources for your team.
The real numbers:
When considering using an agency, you might be tempted to simply compare the agency fee against the presumed zero that internal recruitment costs, but the data shows that zero is, in fact, a myth.
Due to the limited resources and competing priorities already outlined above, in-house recruitment processes often suffer from longer time-to-fill; and time, of course, is money. The average cost of replacing an employee in the UK is 6-9 months of their annual salary. That is 50-75% of their salary. For senior roles, this can inflate up to 213% of a salary. What does this mean? You want the downtime between employees, and the resources needed to get new talent up to speed to be as small as possible.
Recruitment agencies are equipped to handle recruitment efficiently, leveraging their expertise and extensive candidate networks to accelerate the hiring process. By filling positions faster, agencies help mitigate the opportunity costs associated with prolonged vacancies, allowing your organisation to maintain productivity and seize business opportunities without delay. Due to the reach of their passive network, finding someone who can hit the ground running and cut down on business downtime is also simpler with a recruiter.
Ultimately, when considering the costs of recruitment, partnering with a recruitment consultancy proves to be a cost-effective choice. It isn’t fee vs. nothing. Their expertise, access to talent, reduced administrative burdens, and ability to deliver high-quality candidates contribute to significant savings over in-house recruitment. By leveraging the resources and knowledge of recruitment agencies, businesses can streamline the hiring process, reduce costs, and make better hiring decisions that positively impact the bottom line.
Blog By: Arantza Asali
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