Striking the Balance: Maximizing Hiring Efficiency with a Blended Approach
Hiring is a complex process that requires careful consideration of both fixed and variable costs. While internal recruitment offers control and consistency, external agencies provide flexibility and expertise. Rather than choosing one over the other, a strategic blend of both approaches allows businesses to optimize their hiring process. By leveraging the strengths of each, companies can reduce overall costs, ensure the timely filling of key positions, and maintain the agility needed to adapt to changing market conditions.
When evaluating the financial impact of internal versus external recruitment, the comparison can be eye-opening and is the debate of fixed versus variable costs. Below is the breakdown for an employer with an annual hiring goal of ten or more hires.
Talent Acquisition Partner: $80,000 (avg. salary) + $24,000 (overhead costs) = $104,000
Talent Acquisition Specialist: $50,000 (avg. salary) + $15,000 (overheard costs) = $65,000
LinkedIn Recruiter Seat: $10,000 x 2 = $20,000
LinkedIn Job Slots: $1,400 x 10 = $14,000
Recruitment advertising (Google, Indeed, Job Boards): $1,500 x 10 = $15,000
Employment Screens (Drug, background, credit, etc.): $150 x 10 = $1,500
Hiring Bonus Program: $10,000
Total Hiring Budget: $229,500
In comparison, external recruitment agencies might seem costly but offer a different, flexible financial structure & budget. This includes comprehensive recruitment services such as background checks, reference checks, degree verifications and guarantees. While the one-time fee can seem high, it eliminates or decreases internal fixed costs such as salaries and subscription services. With agencies working on a contingent basis, the variable cost is only incurred as a hire is made, saving significant upfront expenses while eliminating the complexities of managing large internal recruitment teams. The strategic decision to identify an external recruiting partner with expertise in your industry will save you time and your company money.
Further consideration is given when considering the cost of keeping a position open. Below is an example of an internal team attempting to fill a sales role that remains open for six months to a year in a territory that has a $3,000,000+ annual revenue goal.
Six Months:
- Lost Revenue: $1,500,000
- Recruitment Costs: $5,000
- Overall Operational Impact: $75,000 – $100,000
Total Cost for Six Months: $1,580,000 to $1,605,000
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One Year:
- Lost Revenue: $3,000,000
- Recruitment Costs: $10,000
- Overall Operational Impact: $150,000 to $200,000
Total Cost for One Year: $3,160,000 to $3,210,000
These substantial losses underscore the importance of filling high-revenue sales roles promptly to avoid significant financial losses to the company’s revenue and morale.
By working with a specialized recruiter as needed, you will reduce costs per hire while avoiding lost revenue due to a position remaining open for long periods of time.