Looking to outsource recruitment? Whenever we talk about recruitment agencies to clients who have never used recruiters before, the one thing they all say is recruiters are expensive aren’t they? Quite how they know this if they have never used one is difficult to understand, it’s just the perception some businesses have. So, should your business use a recruitment agency?
Should my business outsource recruitment to an agency?
The question of ‘Should I outsource recruitment?’ or ‘Does my business need a recruitment consultant?’ can be complex to answer. In this post we’ll just consider the cost element.
Whilst we have posted before on the benefits of recruitment agencies and how they can help in search for staff, there are times when recruiters just aren’t necessary and whilst you may be surprised to hear a recruitment company state this fact, there are also times when outsourcing recruitment to an agency makes perfect sense.
The easiest way to determine whether a recruitment agency is what your business needs is to utilise the example of a sales employee.
Let’s say ABC Retail requires a new business development manager and are looking to pay £30k + bonus. ABC Retail requires the new business development employee to sell £50k worth of product at a 20% net profit each month.
Now ABC Retail can go and place a job ad directly on reed, Total or any other job board for £175+ vat or there abouts. A recruitment company wants to charge £1500+ Vat for finding this employee. This looks a no brainer, ABC retail should recruit themselves, right?
Let’s examine this outsourcing recruitment example further.
ABC Retail places a job ad and it runs for 30 days and whilst replies filter in, sometimes the applicants don’t really stand out.
Anyone who has used job boards knows response can vary between 1 applicant or over 100 all of different calibres and suitability.
The cost for job board advertising can reach over £1000+ Vat quickly and still with no guarantee of a candidate response or a new employee, and costs all paid up front.
A recruitment consultant would know exactly which job boards to use that best match who ABC Retail needs targeting more highly matched candidates
Not only will the outsourced recruiter know where to advertise the job vacancy but they will have access to major job boards which ABC Retail may not. The outsourced recruiter can also utilise their in-house network of candidates, LinkedIn and other social media methods of recruitment more quickly and efficiently
Add into the equation the time spent evaluating every application, contacting candidates, arranging interviews, detailing shortlists of highly qualified candidates etc, it is clear to see where the benefit of recruitment consultants adds value to the hiring process.
Don’t forget the hiring guarantees, rebates and replacement candidates, not to mention the hire now – pay later terms that don’t exist on the pay upfront job board advertising or CV database access services with no guarantee of finding a candidate.
The hidden value of outsourced recruitment lies in the money saved for the client & increased service level.
So the amount of work done by the recruiter probably couldn’t be done in-house by ABC Retail for the same money. The job boards & CV database access costs have shown that it really isn’t worth doing in-house and recruiters have negotiated high volume discounts too.
That is before the labour cost is calculated to search the database or place the ads and sift through the responses.
Yet the biggest saving comes from time. Lets say ABC Retail runs the ads for 30 days and does find a candidate. They employ them and things go well.
Unless ABC Retail strikes lucky, it is highly likely the recruiter will find a better candidate faster, maybe in 2 weeks.
Using ABC retails hypothetical sales figures earlier in the post, using a recruiter that provides a new employee 2 weeks faster would mean the employee is generating value for the company quicker to the tune of £5k 2 weeks earlier than the DIY approach, in addition to the savings of the in-house team and the associated costs.
An outsourced recruitment consultant isn’t always the answer, especially if they are charging in excess of 15% of salary. Admin jobs tend to be recruited in house.
RSO Ltd work differently and we even allow our clients to set their own fees. If you think you know the true cost of recruiting in-house, come and challenge us. We can do it more cost effectively, quicker and on a no hire-no fee basis with terms to suit your business. Consider outsourcing your recruitment today.
Why not get in touch, our advice is free.