Just How Much is Recruitment Costing Your Company?

It’s time to draw a line. Use the latest in Big Data technologies and you could cut spend by up to 90%

Let’s say you are a Financial Director of a 250 strong company in the service industry. It will be in media or communications of some kind and so you will mostly employ graduates. There will be a high percentage of young people in the organisation, but you pay well and the average salary is around £40k.

Turnover will be somewhere between £20-30m. Much less than £20m and you will be losing money, much more than £30m and your success will attract competition that will drive down revenue. Annual profits could be around £4m.

You are in a popular sector and competition for talent is fierce. The age profile of the organisation is low and so turnover of staff is high. You have talked in board meetings about the importance of retention and the CEO has some ideas about the culture she is working on. But you cannot argue about the numbers, young people don’t stick around, they need to work their CV and obtain a range of experiences. A 250 strong company is big, but it is tough to be able to provide the right career opportunities for everybody. In your sector, keeping people for an average of five years is an achievement.

So where is your company, three, four or five years?

The recruitment cost line in your accounts has been slowly rising. It faltered after 2008 as there was a pause in growth and people stayed with you longer. But for the last few years, costs have increased.

Where is it now, is it the third biggest cost centre after wages and office costs?

If you are still relying on recruitment agencies, say you have negotiated a deal of 12% and your average retention is five years, then the recruitment cost line will be around £250k. This doesn’t include the cost of advertising, job boards and the in-house costs.

Do you have an in-house specialist recruiter, or do you rely on the HR Department?

If you could draw a line through your recruitment costs, profits would rise by about 6%. If competition is tight in your sector and margin is lower, then the improvement in profit could be over 10%. Over the last few years you have probably focused on costs. The years after 2008 were tough. You probably thought there was no more fat, certainly nothing that could deliver a 10% improvement in profits. You need Big Data technology.

Big Data recruitment doesn’t eliminate recruitment costs, but it can cut them by up to 90%. There is a revolution going on in recruitment. Big Data can improve profits, but that’s just the start. Big Data brings the benefits normally associated with high cost headhunters, it can discover hard to find applicants. It can also find the most suitable candidates for the job, ones that will stay longer.

Worth a walk down to HR to find out how HR is sourcing your applicants?

You can get in touch with Rod via LinkedIn

Mike Sandiford
Head of Partnerships
0207 193 9931

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