Embedded Talent Providers are not only helpful for your talent function, but they can be great from a finance perspective too. By cutting down costs and helping you forecast more accurately due to their fixed-cost model, your CFOs will have significantly fewer problems when it comes to cash flow and reliability in their forecasts.
At every startup, finance executives have, generally speaking, four broad responsibilities:
- Preserve the assets by minimising risk and getting the books right
- Help run operations effectively with tight financial planning
- Shape overall strategy for the financing of the company
- Instil an approach that leads other functions to perform better
These goals are achieved through accurate forecasting, budgeting, and managing financial resources. You must forecast accurately to ensure you have enough capital for your runway. And, you must be able to manage your finances with the money you have until your next round of funding (or sufficient profitability to self-fund your growth).
Things get a bit bumpy when you start to scale. As you increase your hiring, it isn’t just the new salaries you have to factor in, but also an extra 20% fee to the recruiting agency. The 20% fees can incur again if the employee the agency hired for you left the job and you need services again. And the odds of this depend on both the quality and general fit of your hire.
And, there is really no way to forecast these varying agency fees predictably, because some months will be filled within 2 weeks, and another may take 2 months.
Embedded Talent Providers, also known as ETPs, solve this problem for you. It’s a fixed-cost solution for all your sourcing/recruiting needs. As opposed to the hefty 20% fees charged by Recruiting agencies, ETPs charge a fixed price helping you to forecast accurately. They also let you consolidate all the recruiting costs as much of the sourcing software is included in the fee. Lastly, the embedded approach ensures that your Employer Branding is done right – saving you a ton of money on external branding consultants and freeing up capacity for your Internal Recruiters.
In this guide, we will explore the six reasons why finance people should be using Embedded Talent Providers over Agencies.
#1 Accurate Predictions
As a financial controller, your job is to ensure the accuracy of financial projections. Your scaling company will succeed only when you know how much to spend – and, just as importantly, when to spend it. Accurate forecasts enable you to do that.
The problem with agencies, or really any other model of recruiting that operates on a variable cost basis, is that you do not have a fixed estimate of how much it will cost.
However, ETPs have a fixed-cost model – meaning that you know how much it will cost to the penny to hit your headcount growth goals.
The clarity on the cost of hiring enables you to forecast your expenses more accurately. Accurate forecasts make it easy for you to ensure the trust of your founders in your managerial skills and the financial sustainability of your scaleup.
#2 Consolidate costs
If you go with traditional modes of recruiting, you will have to pay for all the tools and software used in the process. It is not only an additional cost but sometimes, a completely different job altogether (ie, sourcing is its own function).
However, the Embedded Talent Providers do not charge you for the sourcing software. All the tools they need are included in the fixed-price deal you get, helping you consolidate all the relevant costs to access the top 10% of candidates in the market.
#3 Improved ROI
Recruitment ROI refers to the return you get on every dollar invested in the hiring process and the salaries/benefits of your employees. It is a metric used to measure recruiting and workforce effectiveness.
The key here is to increase the dollar value added by the recruits compared with the money spent on hiring them to maximise the ROI.
When recruiting agencies increase your cost by charging a 20% fee on every hire’s salary, ETPs provide you with a sigh of relief through a fixed-cost system. When you are hiring at scale, opting for an ETP can be a game changer in terms of costs.
Hence, it skyrockets your Recruitment ROI with its embedded approach.
#4 Improved Cash Management
82 percent of businesses fail due to poor cash management, a U.S bank study revealed.
Cashflow issues are problems that even startups with world-changing products can’t handle.
After a global VC investments downturn, cash management is the key to keeping your company alive. With this being said Embedded Talent Partners and Sourcers are a great way to improve your cash management.
You don’t just save the 20% fees on the salaries of your new hires but also have a chance to plan your complete recruiting costs and factor this into your runway – thanks to the fixed-cost pricing model.
#5 Incorporated Employer Branding
Establishing your Employer’s Brand is a time-consuming task. It not only takes a lot of time, but you also need to invest significant financial resources. Despite many companies simply neglecting employer branding, it is absolutely key to attracting the best talent in the market.
Also, you need to have a consistent effort throughout the company. It isn’t just a ‘one-and-done’, but a process of establishing your employer brand, and then incorporating this into your recruitment processes on an ongoing basis.
Embedded Talent Partners are well-trained in Employer Branding, and since they offer a fixed-price solution, you do not have to pay extra for the branding.
As a financial controller, it helps you avoid costs and increase overall profitability.
#6 Overall Profitability
In the end, your performance as a financial controller/CFO is about increasing the profitability of your startup.
With ETPs – you get lower costs, higher recruiting ROI, and improved cash management.
All this contributes to your profitability.
If you’d like to find out more about a fixed cost recruitment model that helps you both hire significantly better talent whilst simultaneously reducing unwanted recruiter fees, simply click here and a member of the team will get in touch.