Tactics to Reduce Recruitment Costs
- Dec 22, 2015

What are the true recruitment costs?

There are direct recruitment costs, such as advertising and agency fees and then there are associated recruitment costs, such as the salaries of people involved in the recruitment process and the subsequent training and development of a new hire.

There are also indirect recruitment costs if the subsequent hire was not right and leaves within the first 12 months and there are even associated indirect recruitment costs if the bad hire had a negative impact on the people around them or caused a loss of income as a result of the time that they spent in the business.

Reducing recruitment costs is not always about reducing spend either, because the big picture needs to accept the long term implications of getting it wrong.  A larger advertising budget might result in more jobs being filled directly and subsequently, reduce agency spend for example.

Investment into a modern recruitment management system might reduce the time it takes to hire staff and over the year provide a generous return on investment.

There are low cost, fixed price recruitment solutions out there for just £199, that fill less than 25% of the jobs that they take on, but are they really worth entertaining if for £100 more you can utilise a system that fills more than 75%? The obvious outcome here is a duplication of costs.

When it comes to advertising spend I would start by saying that it’s more about buying the right advertising. Just because Monster is cheaper than Jobsite or CV-Library doesn’t make it cheaper really if you don’t fill the jobs.


So what are the highest costs in recruitment?

Without any doubt, the highest recruitment costs are incurred by getting it wrong. Without repeating all the statistics mentioned in previous chapters, the estimated cost of making a bad hire is in excess of £50k, so investing in the tools to properly assess applicants is key to delivering a cost-effective solution long term.

However, the best way to reduce recruitment costs is quite simply, to focus on retention of the people that you already have. If you don’t have to replace, you don’t incur any costs. Some budget should be put into a strategy that supports this. But of course, this is a massive topic all on its own. I just could not see how we could write a chapter on cost reduction without at least mentioning the topic of staff retention.


workplace culture


There is an argument that even agency recruitment costs pay for themselves because using a professional 3rd party saves time and effort in the process and if the quality is superior to what you can recruit yourself, the agency fee will potentially be recovered many times over by the higher calibre individual hired.

This seems like a good place to start as of course agency recruitment costs, even if they can pay for themselves, can still be avoided and a best in class internal recruitment system is actually quite often capable of matching the agency recruiter for quality. That’s not to say, you should not use agency recruiters, just use them more intelligently and be happy to pay the fee if they can deliver superior talent.

This leads me back to the ‘recruitment platform’ that forms the centrepiece of any best-in-class recruitment process. For any company to be serious about reducing recruitment spend without reducing the quality of new hires, they will undoubtedly need a recruitment platform at the heart of their strategy.

The recruitment platform can assist in so many ways, especially around efficiency, thus giving time back to the recruiter to spend on the best applicants. A poor and inefficient recruiting process can also affect candidate quality and lead to extended administration time and duplication of effort, not to mention mistakes, including good candidates getting missed.


12 ways to cut recruitment cost:

     •     Get a recruitment management system in place and improve efficiency

     •     Deploy an efficient recruitment process that has tight KPI’s

     •     Choose the right advertising channels at the start

     •     Spend more upfront and less in the long term and apply a sensible budget from the start

     •     Use fixed price services and getter better value for money for your advertising budget

     •     Use contingency agency services to compare quality and as a back up to your own efforts

     •     Apply due diligence and hire the right people for your organisational culture

     •     Use behavioural assessments to identify areas of potential conflict

     •     Focus on retention strategy pre and post-hire

     •     Use referral programs and build a good career page on your website

     •     Target between 75-95% direct hire

     •     Reward your recruiters for recruiting people that stay more than 12 months


About the author

Mark Stephens has worked within the recruitment sector for nearly 20 years both in-house and agency side and more recently within the technology environment. Mark is a serial entrepreneur and is the founder of Smart Recruit Online, the Recruitment Alliance and The HR & Recruitment Resource Library. Mark has dedicated his time since 2007 researching the online recruitment sector from a user, technology, and candidate perspective and is regularly published and quoted by leading industry publications for his research and personal opinions.

Connect with Mark Stephens on LinkedIn. 



Smart Recruit Online offers an award-winning talent attraction software that can streamline and revolutionise your recruitment. To find out what we can to for your recruitment strategy, book a demo by clicking here.

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Mark Stephens

Mark has established a reputation for his passion and enthusiasm over twenty years working in the recruitment industry, both client and agency side. For the last ten years, he has been researching the HR & Recruitment landscape from both a technology and people perspective. A previous winner of the prestigious Chambers – Innovation in Business award, Mark is a serial entrepreneur and is the founder of Smart Recruit Online Ltd, CareersPage Ltd, The HR Resource Library and Corporate Wellness & Mental Health UK Ltd. His company, Smart Recruit Online, has been the winner of 7 national and international awards in the last 18 months for recruitment innovation. Mark has dedicated his time since 2007 researching the online HR & Recruitment sector from a user, technology, and candidate behaviour perspective, and is regularly published and quoted by leading industry publications for his research and personal opinions.

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