Even in a bull market, hiring top talent without breaking the bank has always been a delicate dance. And this dance never gets more fragile than when the market takes a downwards trajectory and the market responds in kind. With many businesses facing significantly decreased revenue, many founders are being extra vigilant (and rightly so) as to how they can reduce costs, as well as increase revenue.
Often an overlooked area for optimisation, the talent department represents potentially one of the biggest departments to slash costs significantly, the question is…”how”?
Here are 9 simple tactics any scaleup founder or head of talent can use to significantly reduce hiring costs:
- Upfront Investment > On Success
Ditch those traditional headhunters charging 20% of a candidate’s salary and opt for a more cost-effective approach: monthly retainers or “tokens” (representing a placement). According to a study by Hunt Scanlon Media, companies can save up to 40% on recruiting costs by switching to a retainer-based model. This way, you’re paying for the recruiter’s time and effort upfront, which encourages them to find you the perfect candidate more efficiently. Plus, it’s a win-win – the recruiter gets guaranteed income, and you save big on your cost per hire.
This extra commitment to the recruiter should be returned in kind, with more dedication, resulting in better candidates presented to you in a fraction of the time. Often, it is ‘perceived risk’ that on-success is a lower risk model, however when you factor in the intangibles that drive results, a fixed cost solution should produce significant savings. That being said, make sure to commit to the right recruiter.
- Leverage Free Trials
The market is flooded with tools that grant access to various pools of candidates, and many of them offer free trials. To save thousands to tens of thousands of dollars, strategically sign up for these trials based on your hiring needs and your talent team’s capacity to make the most of them. For example, LinkedIn Talent Solutions found that their users saved an average of $3,000 per hire during their free trial period. Timing is everything, so plan your trials wisely and watch the savings roll in. By strategically pacing your free trials factoring in your current talent team’s capacity, as well as your hiring needs (think tech candidate platforms during periods of technical hiring drives) you can save thousands, even tens of thousands, in candidate access fees.
- Embrace Remote Work
According to a FlexJobs survey, remote work options can reduce turnover by 25%. By embracing remote work, you can tap into a global talent pool and significantly cut costs related to office space and relocation expenses. Additionally, you’ll have access to candidates who may be more likely to accept lower salaries in exchange for remote work flexibility.
- Develop an Employee Referral Program
A LinkedIn study showed that employee referrals can reduce hiring costs by 50%. Develop a strong referral program to incentivize your current employees to recommend qualified candidates. Not only can this reduce your recruiting costs, but it can also improve employee satisfaction and retention.
5. Use AI-Powered Recruitment Tools
Invest in AI-driven recruitment tools to streamline your hiring process. According to Ideal, an AI-driven recruitment platform, companies that use AI in their recruitment process reduce their cost per hire by 71%. These tools can automate tasks such as candidate screening, communication, and interview scheduling, which save both time and money.
- Implement a Strong Employer Brand
A study by LinkedIn found that companies with strong employer brands see a 50% reduction in cost per hire. Another data point from the same study reveals that a strong employer brand can reduce turnover by 28%. By investing in your employer brand, you’ll not only save on hiring costs but also attract better talent. Focus on creating an engaging online presence, sharing your company culture, and promoting your values to stand out from the competition. In turn, you’ll attract candidates who are genuinely interested in working for your company, leading to higher retention rates and lower hiring costs.
- Offer Competitive Internship Programs
According to the National Association of Colleges and Employers (NACE), 58.6% of interns are offered full-time positions, and 77.3% of them accept the offers. Additionally, Glassdoor reports that companies save around $21,000 per year on average by converting interns to full-time hires. By offering competitive internship programs, you can attract high-quality candidates who could potentially transition into full-time employees. This approach not only helps you save on recruiting costs but also allows you to evaluate candidates on the job before committing to long-term employment. Providing valuable learning experiences and a clear path to a full-time position can make your company a sought-after destination for top interns, further reducing your hiring expenses.
- Focus on Retention and Internal Mobility
The Work Institute’s Retention Report shows that replacing an employee can cost up to 33% of their annual salary. It’s crucial to invest in retention initiatives and internal mobility programs to reduce turnover and save on hiring costs. By creating opportunities for growth and development within your company, you’ll keep your top talent engaged and motivated, ultimately reducing the need for external hires.
- Partner with Universities and Bootcamps
Forge partnerships with universities, coding bootcamps, and other educational institutions to tap into a pool of fresh talent. According to a study by Course Report, 80% of coding bootcamp graduates find a job in their field within 180 days of graduation. By partnering with these institutions, you can gain access to job-ready candidates, while also cutting down on the resources required for extensive training and onboarding. Many universities and bootcamps also offer job placement assistance, which can help reduce your recruiting costs and efforts.
In conclusion, hiring top talent doesn’t have to break the bank. By implementing these nine strategies, you can cut costs while still attracting and retaining the best candidates for your scaleup. So, go ahead and ditch those traditional headhunters, leverage free trials, embrace remote work, develop employee referral programs, use AI-powered recruitment tools, build a strong employer brand, offer competitive internships, focus on retention and internal mobility, and partner with universities and bootcamps. With these tactics in your arsenal, you’ll be well on your way to hiring success without overspending.