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The Hidden Costs of Recruitment Processes

July, 2024
Adam Richardson

When thinking about hiring costs, many HR teams and hiring managers think of the advertising cost, recruiter fees and on boarding. Some even think about the savings resulting from leaving a position vacant for a period. 

However, when we consider the recruitment process as a whole and the implications of drawn out, failed or aborted processes, the elements listed above are the tip of the iceberg. 

Here are some of the hidden costs that companies should keep in mind when thinking about recruitment:

  • Second choice candidates – Good candidates don’t stay on the market for long and generally favour decisive employers, so a slow or disorganised recruitment process increases the likelihood that the better/best candidate(s) will be hired by a competitor before you are in a position to make an offer. Of course, you may end up with someone good (enough) but on balance it is unlikely they will deliver the value that your preferred candidate would have.
  • Project delays – A competent candidate not being hired and onboarded to schedule can result in significant costs to the business. For example, a delay in a construction project as a result of the right materials not being available at the right time to the correct specification could easily dwarf any recruitment costs for the role that should have avoided that problem.
  • Increased churn – Delays in hiring can result in greater workloads or stress for other members of the team, which in turn leads to employees who were previously content in their roles becoming active candidates. In such circumstances, one vacant position can quickly become two or three. And of course, each one of those recruitment processes (or counter-offers) carries its own costs.
  • Wasted time – There is a time cost to reviewing CVs, preparing for interviews, interviewing, providing feedback etc. How much time varies significantly from role to role but I estimate clients average 2-3 hours on each candidate that makes it to first round interview, and 6 hours for every candidate that makes it to second round. For an aborted recruitment process that could easily mean 3-4 days’ of time wasted.
  • Reputational damage – Procurement and commercial functions for construction are relatively small niches. Poor recruitment processes can damage an employer’s reputation, making it harder and more expensive to attract good candidates in the future.

Of course, irrespective of how good your recruitment may be, some processes will inevitably be less smooth than you would like. However, my observations over the last twenty years leave me in no doubt that companies that recognise the hidden costs of recruitment are more likely to:

  • Offer realistic budgets for hiring candidates of the calibre they want;
  • Put in place a timeline for the recruitment process (having consulted with the relevant internal stakeholders); and 
  • Stick to that timeline.

The result is they secure their preferred hires more regularly and often for less money than their competitors. They also enjoy lower staff further churn reducing their costs and given their teams are more stable, the innate knowledge that builds up then makes them more efficient.

So, my advice if you want to reduce your recruitment costs:

  1. Educate everyone involved about the hidden costs of recruitment;
  2. Consult anyone who can veto the hire on the final brief and the recruitment timeline before setting it in stone;
  3. Ensure that budget is ringfenced for the hire and that diary slots are booked in everybody’s calendars for CV reviews, interview prep, interviewing and interview feedback; and  
  4. Communicate regularly with everyone involved to remind them of the timeline. 

About the author:

Adam Richardson - Managing Director

Adam has over 20 years’ experience recruiting procurement and commercial professionals across the construction sector.

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