According to Glassdoor, the average cost of hiring an employee for a U.S. company is approximately $4,000. It Is a necessary investment and worthwhile if you select a candidate who becomes a high-performing employee. Hiring costs are part of doing business.
Then there are the costs associated with hiring the wrong employee; these can be even steeper. When you have to let a bad hire go, you know all the work assigned to them is no longer being done. This means you may have to contract temporary or freelance employees, pay other employees overtime to help make up their work or fail to deliver on client deadlines. These can all result in lowered employee morale and negatively affect your bottom line.
However, there are also hidden costs of a vacant position that can be easily overlooked. When you make a new hire, you probably are not anticipating it to go wrong. After all, you would not have hired them in the first place if you knew they were not going to work out, right? When you have already spent valuable time and resources on interviewing, hiring, and onboarding an employee you thought was the right fit, it can be a shock to realize they actually are not. Now, you will have to repeat the whole process to find their replacement — which you likely did not factor into your budget or timelines.
What is the True Cost of a Bad Hire?
According to a Harris study, 41% of employers said that the cost of a bad hire was greater than $25,000 and 25% said it was greater than $50,000. This was greatly dependent on the position — a role with a higher salary that requires more specialized skills and experience will have a greater cost of employee turnover, because it will likely take you longer to find a qualified replacement.
Now that you know the true cost of a bad hire, you understand that hiring the wrong person for the job is not just a harmless mistake. You are probably asking yourself: “How can my business avoid these costly consequences and minimize our hiring costs overall?
Turning to professional staffing agencies drastically increases your chances of placing the best candidate in the right position the first time around — effectively minimizing the risk of dealing with the cost of a bad hire. Between speeding up timelines and increasing cost efficiency, there are numerous benefits from a financial perspective as well.
While some companies may have the misconception that external staffing services are more expensive than in-house recruitment initiatives, utilizing professional recruiters or headhunters can actually help you reduce the high cost of hiring a new employee. Here are a few examples of how this works.
Minimize Your Recruiting Expenses With These Insightful Strategies
Avoid turnover
New hire turnover is incredibly costly and it is often an expense that is not factored into your hiring budget. When a new hire does not work out, you have lost the money you put towards recruiting costs, such as interviewing, hiring, and training them. Then, you have to do it all over again. According to research by SHRM, it can take up to 50-60% of an employee’s annual salary to find their direct replacement.
Professional staffing agencies and headhunters help minimize the risk of new hire turnover by using their proven methods, vast resources, and staffing expertise to place the right candidate in the right role the first time around. This way, you are more likely to avoid having to pay the cost of hiring a new employee again.
Optimize the interview cycle
Professional recruiters and headhunters can help get your ideal candidate sourced, placed, and started on work more quickly through an expedited hiring process. At 4 Corner Resources, we aim to have a fully screened and qualified candidate for any role within 48 hours. How do we do this? By:
- Maintaining relationships with passive candidates;
- Leveraging our Applicant Tracking System (ATS) and resume database to maintain detailed records of all interactions with candidates and job seekers; and
- Staying up to date with a vast, and constantly growing network of active job seekers.
This optimized hiring process results in top candidates being placed faster — which means your new hire can finish their training and actually start producing value for your business sooner. When the average company loses anywhere between 1% and 2.5% of their total revenue on the time it takes to bring a new hire up to speed, you definitely don’t want to have to extend or repeat this costly process.
Free up your in-house resources to be used more effectively
You and your employees are already incredibly busy. When someone in-house has to post job descriptions on 20 different platforms and rifle through an endless stack of resumes, it takes even more of their time and energy away from the day-to-day responsibilities of their role. In fact, it is estimated that small business owners spend around 40% of their working hours on tasks that do not directly generate income — such as hiring.
Instead, consider turning to professional staffing agencies to conduct these often tedious and time-consuming front-end recruiting processes. You and your employees will then be able to focus on other revenue-driving ventures for your business; positively impacting your bottom line.
Have access to more recruiters
Many businesses may only have one person or a small team dedicated to handling HR and/or hiring tasks, and recruitment is likely not even their area of expertise. On the other hand, professional staffing agencies will have a large team of recruiters on-hand who are highly-skilled, experienced, and passionate about recruiting.
They can help you address unexpected or volume-based needs that your in-house team may not have the capacity to handle, such as having to hire multiple people at once or bring on contractors immediately for a project-based need.
Consider utilizing professional recruiters or headhunters to work hand-in-hand with your HR professionals rather than having them go at it alone. This way, you can produce the best, most cost-effective results while taking the brunt of recruiting tasks off of your HR department’s shoulders.
How Staffing Agencies Can Help With Your Hiring Costs
Gain access to in-depth recruiting experience and expertise
As a business owner or manager, recruiting and hiring is likely not your exact area of expertise. However, recruiters at professional staffing agencies maintain extensive knowledge of recruiting best practices and hiring trends from working with a wide variety of clients and candidates. One of the major benefits of working with a staffing agency is that they can bring these insights directly to your business.
Working with a recruiter can help you identify your workforce goals to form a recruitment strategy that aligns with it. Then, the professional staffing agency will source and screen candidates on your behalf that match your requirements and expectations. This way, you are not just making hires to fill open desk spots — you are making strategic hires backed by experience and expertise.
Have partner that will soley focus on recruiting
You and your employees already have a lot of day-to-day business responsibilities to worry about, meaning that certain internal recruitment tasks often fall by the wayside. This behavior may seem minor in the moment, but it can add to the cost of a bad hire later. For example, 11% of respondents in the Harris study claimed that a bad hire was made because the candidate’s references were never checked.
In this case, it was likely a time crunch that caused these employers to not check the candidate’s references. If they had taken the time up-front, they may have caught wind of an issue that would have prevented them from selecting this candidate in the first place.
Third-party recruiters can be a valuable partner for your business because they are solely focused on recruiting — unlike your internal employees who are busy working on numerous ventures and tasks at once. Professional staffing agencies will have the proper time and resources to dedicate to sourcing and screening candidates, ensuring that no necessary steps are missed simply due to time constraints.
Choose from a wider pool of qualified candidates
Reputable professional staffing agencies attract top-tier talent and therefore have access to a vast pool of qualified candidates. Working with a recruiter who is constantly expanding their professional network and maintaining relationships with both active and passive job seekers means they can connect with those job candidates on your behalf.
For example, at 4 Corner Resources (4CR), we often source and screen hundreds of candidates’ resumes for a single job opening to find the best fit. A job posted by an internal recruiting team may not yield nearly the same volume of applicants, meaning you could be missing out on your ideal employee simply because they never saw your job posting. When you are able to place the most qualified candidate in any given position the first time around, there is no need for turnover — or the costs associated with it.
Experience an expediated hiring process (without sacraficing quality!)
According to the Harris study, 38% of respondents who made a bad hire identified the need to fill the job quickly as the main reason behind hiring the wrong candidate. While your business wants to minimize the lost productivity from a vacant position, settling for just any replacement instead of the right placement can actually cost you more in the long run. If an employee is let go or leaves for another opportunity and you rush to find their successor, who then has to be replaced again, you have now spent double on recruiting and onboarding costs.
Working with a recruiter can help you get new hires up and running more quickly through an expedited and streamlined hiring process. At 4CR, our goal is to have a fully-screened and qualified candidate for non-leadership roles within just 48 hours. With this optimized hiring process, the right new hire can be placed and onboarded faster — meaning they will not need to be replaced soon after and can start actually producing value for your business.
Lower Your Cost of Hiring an Employee By Partnerng With The Right Recruiting Firm
Overall, partnering with professional staffing agencies or headhunter tends to be more cost-effective and efficient in the long run than exclusively using in-house recruiters. Whether your company is large or small, hires frequently or infrequently, turning to professional recruiters can save you money, time, and headaches.
If you are looking for a partnership to provide you with the best candidates in a cost-effective and efficient way, it is necessary to choose a recruitment agency that puts your needs first. Headquartered in Orlando, 4 Corner Resources continually ranks among the top employment agencies in Central Florida — but we are able to use our proven recruiting strategies, resources, and extensive candidate networks to place the best applicants in companies operating in various industries all across the nation.
Contact us today to learn more about how our services can help you lower the cost of hiring an employee without sacrificing quality!
