Efficiency vs. Costs: Why is an external recruitment agency more cost-effective for your company?
The company facing the task of acquiring a new employee has two options: conducting the recruitment in-house or opting for recruitment outsourcing. As it turns out, the latter option is more cost-effective. We will examine the efficiency and costs of working with an external recruitment agency compared to using your own resources and thus answer the question of why recruitment outsourcing is the better solution.
How much does recruitment cost?
First, let’s take a look at the expenses a company must incur in the recruitment process. The final cost of recruitment consists of several factors. The first one is the price to be paid for posting job advertisements on popular job portals. In the case of posting ads on platforms like LinkedIn or GoldenLine, the employer may need to pay for a relevant license additionally. In addition to this, there are costs associated with the recruiter’s or recruitment team’s working hours, graphic design for the job ad, and the time of decision-makers. The basic cost of the recruitment process ranges from a few to even several thousand Polish zlotys for multi-stage or wide-scale recruitment. When planning the recruitment process, it is worth including an additional budget for other expenses. These may include the cost of a potential job ad promotion campaign (i.e., recruitment marketing) or referral program expenses. Additional costs can amount to several thousand zlotys.
The Costs of Recruitment Outsourcing
The situation is somewhat different when it comes to recruitment outsourcing. Companies specializing in employee recruitment typically offer two billing models:
Success fee – payment for successful recruitment. This means that the company covers the recruitment costs only when it results in hiring an employee. The cost can be a percentage of the employee’s salary or a fixed amount for the recruitment. Prepaid model – payment for individual stages of recruitment, with no guarantee of the entire process’s success. Most companies operating in the Polish market offer a success fee model in percentage form. This is because it is the most cost-effective solution. The costs of such recruitment range from 80% of the salary for production workers to as much as 250% of the salary for managerial or directorial positions.
Failed recruitment means additional costs
Traditional recruitment, unlike success fee outsourcing, provides no guarantee of success. Very often the process needs to be repeated, exposing the company to double costs. One reason for this situation is ghosting on the candidate’s part, forcing the employer to search for a new employee.
An even bigger problem arises in the case of ineffective hiring. By “ineffective hiring,” we mean hiring the wrong person and the need to terminate the contract after a few months. Often, it is the employee who decides to end the cooperation. The reasons usually lie in the differences between what the employer declared in the job posting and the actual employment conditions. If the cooperation is terminated a few months after hiring, the employer, in addition to the costs of re-recruitment, must bear the cost of the employee’s salary (from several to even tens of thousands of Polish zlotys, depending on the duration of employment and the monthly salary). Additional financial burdens include all administrative costs, such as the equipment needed for work, licenses, subscriptions, leasing, medical examination costs. Added to this are the costs of training for the specific position and other onboarding-related expenses. Every month without an employee also means missed business opportunities, reduced team efficiency, and possible overtime for existing employees.
Failed recruitment represents a significant financial burden. There is no doubt that outsourcing with a recruitment success guarantee is a much better solution. What is the effectiveness of such a process?
Recruitment Outsourcing – Even Greater Efficiency
Recruitment outsourcing is an opportunity to benefit from extensive, specialized knowledge and diverse experience in the field of effective employee recruitment. Specialists working in recruitment firms know how to create attractive job postings and how to actively search for candidates who perfectly match the requirements and profile of a given job position. Recruitment firms consider candidates from various perspectives, taking into account their skills, experience, and fit with the organizational culture of the company.
Furthermore, recruitment firms use advanced tools and technologies that streamline the entire recruitment process and significantly reduce the time it takes to acquire a new employee. This, in turn, leads to shorter downtime in the company and reduces the risk of a significant drop in team productivity.
The flexibility of the process conducted by an external service provider is also noteworthy, as it can be tailored to the specific requirements of each client. Additionally, a recruitment agency can delegate more than one person to carry out HR-related tasks, which can significantly expedite the process.
The conclusion is straightforward: recruitment outsourcing is a more cost-effective solution, not only for large corporations but also for small and medium-sized enterprises. Utilizing an external HR company is a modern way to manage a company’s resources sensibly and is a good investment in its future.