Recruitment is all about gaining an innovative and competitive edge by having the best people working for your company.
In most companies around the world, recruitment therefore takes a huge chunk of the overall operational costs.
Our new research has found that up to a third of new employees aren’t passing their six-month probationary reviews, costing companies thousands of pounds and creating long-lasting negative effects on businesses. In fact, on average, businesses spend £6459 a year on recruitment and hiring. If a candidate doesn’t work out, not only are these fees lost, but the salary for the probationary period is also wasted – not to mention the time you and your team has spent interviewing and on-boarding. With the average advertised UK salary being £35k (according to Adzuna), this equates to at least £17k lost over a six month probation period.
As a business owner, it is crucial to understand how much recruitment is actually costing your company – and to identify the biggest hitters – before you start searching for smarter ways to recruit and reduce these costs. Some of the direct costs to recruitment include turnover, HR Administration, job board fees, agency fees and advertising budgets, onboarding budget and processing costs. Once you have identified which areas of the recruitment process you are spending the majority of your money on, you can then hone in on those areas to save money.
Gone are the days when money was well spent on traditional advertising – you could get an advert on Monster or Indeed and feel pretty confident that the best and brightest candidates would fill your inbox with CVs. But not today, because the top talent is already at Google, Facebook or one of the sexy, leading startups such as Onfido, Revolut or Pleo.
There’s no quick fix like a traditional advert anymore, and cracking the code to building world-class teams is not done overnight. To embark on a future-proofing journey that will help you create a modern, flexible and highly skilled workforce, there’s a few questions that should be front of mind before you start out:
- Do you hire the right people in the first place?
- Do you incentivize them to stay for long enough (but not for too long!)?
- Do you measure how motivated your workforce is so you can increase their performance?
- Do you work with a blended workforce of both freelancers and permanent employees?
- Do you embrace the latest in recruitment technology?
Not sure how to find the answers? Here’s my top tips for you…
- Do you hire the right people in the first place?
If you hire the right person in the first place, you can save a lot of time in finding a replacement in the future and just focus on how you can grow and retain them. It might sound like I’m stating the obvious, but our research demonstrates that the traditional recruiter method of securing talent is simply no longer working – companies aren’t getting the right person, first time around. Organisations clearly feel that traditional recruiters lack knowledge in terms of what their business involves and what they need in a candidate. In a fast-moving world, where getting the right skills at the right times could mean the difference between success and failure, any lack of understanding can cause real and expensive damage. Worryingly, the research also found that only 8% of businesses feel new hires have all the skills needed for the job. It’s clear, therefore, that businesses really need to spend more time looking at what talent they need, and using an approach that looks into the biggest talent pool available if they are to have the best chance of getting the right person first time around.
- Do you incentivise them to stay for long enough (but not for too long!)?
Our research has found that over a quarter of businesses prioritise cost over quality when it comes to recruitment, but 21% say they later come to regret that decision. It’s good to offer a competitive salary package right away so you don’t waste man hours by forcing recruiters to negotiate and re-negotiate with potential candidates. Also by giving staff slightly above-average salaries, you are basically saying that you expect above-average effort! The larger salaries will generally incentivise a culture of better work output – plus they are less likely to want to leave – saving you money on recruiting again.
Paying people what they deserve will cut your recruitment costs overall as you have a higher skilled and more dedicated workforce. Whether you hire freelancers or permanent employees, remember that quality work costs money, so be prepared to pay. If you want to save money, you should seek to cut out or negotiate lower fees to your recruitment partner (saving you 15-25% of the yearly salary).
Taking it a step further, more companies – in my opinion – should grant shares or warrants to employees so everybody truly has an incentive to give it all they’ve got.
- Do you measure how motivated your workforce is so you can increase their performance?
When you have managed to attract the right people and pay them enough, you’re only halfway there. The reason is that for the skilled labor force, money can only motivate up to a certain point – and most people with skills in high demand have no worries over money and would happily go for a lower paying job if it brings them unique learning and development opportunities, as well as great culture and lots of flexibility.
To start working proactively with motivating your workforce you need to know how motivated they are in the first place. Use tools such as Peakon (known for providing one of the best digital platforms for measuring employee engagement) and Thrive Global (solutions for enhancing employees’ health and performance) to know how your culture and work environment impacts your employees. If they’re not happy, you’ll want to know why. If they’re happy, you’ll also want to know why. Not knowing if they’re happy or not, and not knowing why will kill your company.
- Do you work with a blended workforce of both freelancers and permanent employees?
Most companies in the UK severely struggle to find the competencies they need to keep their businesses running – especially in across the Tech and IT landscape. To gain a competitive edge, businesses must tap into the flexible labour market to future-proof themselves against any upcoming skills shortage. According to the 2018 Talent Shortage Survey, large companies in the UK with 250+ employees have the most difficulty filling job vacancies, with 50% of employers experiencing skills shortages. Large companies account for 0.1% of businesses, but they employ 40% of the total workforce. This demonstrates the significant impact this skills shortage has on the wider labour market. SMBs are feeling the pinch too, with 45% struggling to find the competencies they need to keep their businesses running.
Leading companies not only use freelancers to put out fires and cover the gaps, but proactively work to find the best and most skilled freelancers to work in sync with their permanent workforce. They understand that it doesn’t matter so much what the contract says (perm or freelance), but that going for the right skillset is far more important.
Having a +30% share of the workforce on freelance contracts is not uncommon amongst fast growing tech, creative and IT companies. This share will likely grow in the coming years, so it’s better to get on top of finding, hiring and managing freelancers efficiently sooner rather than later.
- Do you embrace the latest in recruitment technology?
Using technology alongside or instead of the traditional recruitment methods is the best way for hiring managers to access the talent they need in a smarter and more sustainable way. The right recruitment-tech can help businesses validate and hire talent more quickly and more affordably than traditional recruiters or job boards. Depending on your location, industry and the roles you’re hiring for, you should check out the latest in:
a) crowdsourced recruitment (where you ask a big network of people to recommend people and give referrers a referral bonus if you hire who they recommended);
b) freelance marketplaces (that uses AI to match your specific role with thousands of available freelancers in your city to speed up hiring and get access to a new labor-pool);
and c) tools like The Dots (big network of creatives) and skill-specific Slack and Reddit groups where people gather to get geeky.
And here’s one final extra tip… take advantage of social media
The ability and willingness to communicate socially allows an employer to provide an insight into their day-to-day operations, their vision and values, and the type of people who work there. This transparency and authenticity will help to increase the volume of applications you receive from individuals who are already confident that they’ll fit your culture and share your vision and values.
Best of all, social media can be (almost) free – all you need to invest is a little time in putting together the right messages and campaigns, and interacting with your followers. You can of course opt to pay for advertising campaigns to target specific audience groups if you want to take it a step further.
When you’re just starting out, the trick is to choose to focus on the most appropriate channels for your audience, rather than every possible platform. You’ll probably find that LinkedIn is the most relevant to your recruitment strategy. If you’re not sure what techniques are most effective on social media, turn to the countless blogs that cover the subject, or ask your marketing colleagues for support and advice.
