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6 strategies to improve cost-effective hiring

A cost-effective hiring process has never been as critical to businesses as right now. The effects of the global Coronavirus pandemic have taken a massive financial toll on large and small organizations. With very few exceptions, the cost of Coved-19 will see businesses struggle financially for some time.

As business recovery gets set in motion, leaders will have to figure out how their processes must change and what skills they need. Getting those two factors right quickly is critical to surviving post-pandemic recruitment. There’s virtually no lead time between planning what must be done and setting the wheels of trade back in motion.

To further complicate matters, many employees have been laid off or furloughed. Regrouping the existing workforce, aligning them with new goals, and a different company vision will be a challenge. Many roles will have to be redefined, new jobs created, and others will become obsolete. That means radical changes within the workforce and people inherently don’t like change, even more so for individuals who feel insecure and possibly traumatized.

Hiring new staff might be a necessity for restoring operations and moving back to profitability. But how do you attract and appoint the right talent and still keep the cost of hiring manageable?

The average cost per hire won’t be what it was before

Although some costs won’t change, there are new factors that employers didn’t have to deal with previously. One of them is an investment in HR and communications technology. No business can survive without them.

In general, hiring new employees involves various recruitment methods that include:

  • Identifying the need to fill a role
  •  Writing a job description
  • Posting jobs to job boards
  • Mining your talent pool
  • Searching via social media
  • Screening applications
  • Compiling a candidate shortlist
  • Arranging interviews
  • Selecting the best candidate
  • Making an offer

Depending on the company and the role, skills tests, past employment references, and other verifications are interspersed throughout. While most of those steps are still necessary, they’re going to have to be adapted to fit into the new way of doing things. New processes bring different costs. Some employee costs will increase, others will decrease, new costs will arise, and others will disappear.

Recruitment costs have always been difficult to calculate

It’s never been easy to budget for the cost of hiring an employee. There are so many variables, including the role, level, the availability of skills, training, and more. Some jobs are easy to fill, while others aren’t. Hard to find skills, leadership experience, location, and salary expectations versus budget all influence how quickly suitable candidates can get sourced.

The cost of hiring a new employee also differs from one industry to another. For example, in highly specialized sectors like science, architecture, and mining, hiring is mostly done through employee referrals. That dramatically reduces costs because you know that the candidate has the skills, wants to work for your organization, and understands your industry. Even companies that aren’t specialized can benefit from employee referrals, particularly at a time like this.

Also, the extent to which hiring-related services are outsourced impacts cost. Apart from subscriptions to job boards, you might use external service providers to conduct assessments, confirm qualifications, or do medical checks. It can be tempting to drop all third-party services to save on costs, but you must ask whether you have the internal resources to get the job done correctly. Having managers or employees spend time on things that are out of their scope of experience can end up costing you more in the long run. 

They’re spending time on non-income generating tasks, and, if they’re unfamiliar with what they’re doing, they might not deliver. Inexperience can lead to poor hiring decisions based on misinformation.

6 cost-effective hiring strategies to implement now

Many business owners might be reluctant to hire an employee now because the cost can seem to be a financial burden that companies can’t afford. In reality, those concerns can be founded because the true cost of an employee is much more than just their salary and benefits.

But how will your company recover lost ground if it’s understaffed?

The answer is to be strategic about hiring. Carefully factor the hidden costs of every new hire into the apparent expenses. Getting more able hands onboard can see your business recover quickly as long as you make excellent hiring decisions.

Also, don’t rush out with reactive recruitment because of internal pressures. Give your new strategy careful thought before you proceed to implement cost-effective hiring measures.

1. Permanent or temporary

Consider the immediate need that your business is facing and weigh up where you will be six months from now. Will the open roles that exist today still be relevant within the same parameters? You might need extra hands to help get a rush of orders out as your customers start returning. But how does that influx compare to regular trade? It could be better to appoint temporary staff to fill the gaps. Costs are fixed for a short time only, and you might just discover a superstar employee that you can move to your permanent payroll.

2. Internal or external hiring

Not all companies are big enough to warrant an internal HR department, so hiring is usually handled by the owner with the support of their team. Using external recruitment agencies is costly, but in tough times when everyone is spread very thin, it might be a better option. 

Having the CEO spend time on hiring can be too costly for the business. That time could be better spent on planning, reconnecting with customers and employees, and generating income. Many external recruiters work on a contingency basis, meaning that they only charge a fee if they make a successful placement. Placements also usually come with a guarantee period, so if the employee falls out at that time, they will get replaced at no cost. An external recruiter can be very helpful right now for hard to find skills and experience. 

3. External service providers

Job boards are the most common service companies subscribe to. Check every subscription you have to see if it has been delivering the type and quality of applicants you need. Most importantly, have you made successful hires that stayed? If a job board isn’t performing, now is the ideal time to cancel the contract. Do the same with social media platforms like LinkedIn Recruiter.

Are you getting a decent ROI? If not, cancel. Most platforms allow individual posts that are outside of a contract. Although they are pricier, they can work out to be cheaper than a monthly subscription for now. Apply the same analysis to service providers who do vetting or confirmations. 

4. Training and onboarding

As much as we want to employ people who can hit the ground running, it’s impossible. Even if they have all the skills and industry experience, a period of adjustment and fitting into the job is unavoidable. If you don’t allow someone enough time to settle in and expect them to deliver immediately, you could lose top talent.

It takes the average employee between 8 and 26 weeks to reach optimal productivity. Employee onboarding and ongoing training are two essentials that must apply to every new hire, irrespective of the level of the role. Whether training is on the job or done through an external institution, there’s a cost. The internal staff has to sacrifice their productive time to train someone else, and that time needs to be made up. Weigh up your options around cost versus productivity.

5. Hidden costs

Every country taxes employers and employees, and that’s not only tax deducted from employee’s salaries and paid over by employers. Previous research estimated that the average additional cost for employers per employee is 1.25 to 1.4 times higher than the base salary. That excludes the cost of benefits that employers choose to offer to attract talent.

Although many governments globally have implemented tax reductions and payment holidays for employers to kick start their economies, remember that these will only be a temporary measure.

6. Plan for positions that didn’t exist previously

As business moves forward, there could be a need for roles that didn’t exist before. These would likely be in the areas of technology and health and safety. Start considering early on what skills you might need and begin building talent pools for sourcing candidates before the need arises.

Robust talent pools and sound connections with top talent is an excellent means of sourcing candidates at a minimal cost. Investing in an applicant tracking system (ATS) makes it a breeze that doesn’t take up much of your time. An ATS integrates with all your social media accounts, job boards, and your careers site. Suitable applicants and candidates can get imported into talent pools, and you can keep in touch via social media or email. When you need their skills, they’ll be easy to find and likely to be interested.

What does this mean for employers?

Cash-flow is going to be a problem for most organizations for probably the next year, at least. You will definitely have to hire new staff to get your profitability up, but you need to implement cost-effective hiring strategies. Also, what worked before isn’t going to work going forward. So you must also find new talent acquisition strategies.

For many businesses, the future looks like a rocky road ahead. You’ll get through! Just keep a level head and rethink your processes rather than trying to jump back in and doing everything as you did before. Be prepared for radical changes so that they don’t come as a shock.

Leaders and management must exude confidence in the future of the business if they want their employees to feel comfortable. In times of uncertainty, people turn to their leaders for direction and reassurance. If you’re positive and lead by example, your staff will follow your lead. If you exclude your workforce from what’s going down, however, retention will suffer.

Reflect that same confidence through your employer branding via social media and all other communication. Consider what message you’re putting out there. If necessary, re-build a great career site that tells the world, “we’ve got this,” and we’re still an employer of choice.  

You can’t afford to make bad hiring decisions because you want to cut costs, and you also don’t want to lose top talent because they become overburdened. Hiring, onboarding, training, and agility are what will get your business back on track to profitability and success.

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