How to Reduce Your Hiring Costs

Stop hiring people!

Or, if that is not an option, ponder the following: as you may be aware, it is of the utmost importance to grow your business at a healthy rate, which means that you need to keep costs under control. And, since NOT hiring people is not really an option, if you truly want to achieve your growth objectives, you need to get smarter about how to accomplish this. Today, I'll discuss some ways in which you can reduce your hiring costs while ensuring you get the best ROI from your efforts.

One of the primary problems with reducing the costs of hiring is the difficulty in capturing all of the associated costs that are not readily apparent. The obvious costs include running ads and/or gaining access to all job boards (so you can perform proactive searches), assessment testing or hiring a recruiting firm. What is not easily identifiable are the time and costs associated with identifying potential candidates (searching for resumes), properly screening them, the time spent interviewing them, on-boarding/training them and all the other costs associated with ramp-up time and potential lost opportunities during this ramp-up time.

Example of lost opportunity cost: You hire a new salesperson who takes over a $1M territory. They only produce $350K. Not only did you lose $750K in revenue, but you now have to repeat the hiring process (and costs) over again because you didn’t get it right the first time.

The first thing you should do to reduce your hiring costs is: 

reduce risk

Take on the mindset of reducing your risk.

When it comes to hiring, people are like a box of chocolates: you never know what you're gonna get! All you can really do is minimize your risk, and that means being as smart as possible about hiring and doing everything to eliminate the unknowns.

Implement a structured hiring process.

Stop winging it and/or using the “gut” feeling approach to hiring. Define a structured hiring process and stick to it. This should include step by step details of what, where, when and how you will conduct the hiring process from start to finish. For more on this, download our free e-book, 12 Steps to Successful Hiring.

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Take time to clearly define the role.

Not doing this is like entering a race but not knowing where the finish line is, or driving across country without using your GPS or even a map: you’ll eventually get to your destination, but it’s going to take you twice as long and cost you twice as much. The more precise you are about defining the role, the easier it becomes to find qualified candidates that match that criteria. For more on this, download our free e-book on the Peak Performance Profile (P3).

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Be efficient in filling a role.

When you attempt to hire without a defined process that you are committed to, your time to fill a role may increase, costing you even more money. These delays can also mean an increase in costly vacant position days (especially in revenue-generating positions). Additionally, being slow to close on candidates who are in high demand may cause you to lose the very best ones, which equates to just throwing your money out the window.

Don't be cheap with your hiring budget. 

Top talent will judge your company based on what they experience during the recruiting process. A bad experience may scare away the best candidates and will hurt your offer acceptance rates and your employer brand. For example, if candidates who are innovators don’t experience a professionalism and innovation in the recruiting process, they’ll assume that is the norm in your company.

Don’t waste you or your staff’s time. 

Sourcing, screening and interviewing candidates takes a lot of time and costs your company a lot of money. Take advantage of the benefits of using a professional recruiting firm who will do this for you. Realize that like anything else, the hiring process requires professional expertise and since this is probably not what you do every day, you are probably not going to be as efficient and effective as you need to be. Contracting with a reputable recruiting firm can actually reduce your overhead and manage the costs associated with hiring top talent.

And let me be clear: I am not referring to the recruiting firms who simply begin sending you a bunch of semi-qualified resumes in the first couple of days (this should be a big red flag to you). You want to find a firm that takes their time to help you clearly define the role, utilizes a structured hiring process and coordinates and/or incorporates your existing process into theirs. Find a firm that invests (so you don’t have to) in the ability to conduct proactive searches on various job boards vs. simply relying on their own database of past candidates. The firm should also incorporate various assessment tools to further screen and better qualify candidates. They should also conduct the reference checks and full background checks for you. And finally, select a firm that offers a fixed flat rate that is based on their effortsvs. a percentage of the salary, which typically means that they are motivated to place the highest paid candidate vs. the most qualified candidate. The best firms should only send you fully screened and qualified candidates, so you and your team can spend your time (and money) deciding who is the best out of the 3-4 candiates that the recruiting firm sent you.

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