It’s cheaper though isn’t it? The hidden cost of hiring

Not everything is quite as simple as it seems when you look at the cost of hiring. One of the most common questions we are asked is ‘how much does it cost to hire a candidate through a recruitment agency’. The answer varies, of course, depending on the circumstances, but almost universally you can safely say ‘less than recruiting someone yourself’.

I am sure everyone recognises that recruiting a new person for your workforce is not as simple as just placing the advertisement and making the job offer. What people sometimes don’t fully appreciate is just how expensive, both in monetary and resource terms, hiring someone can be. It would be great to just place an ad, and a candidate walks through the door. Sadly, the world really doesn’t work that way.

Some costs are forgotten

The cost of labour involved just getting to a stage where the advertisement can be placed is often forgotten. Firstly, the job specification needs an outline. That is then often taken to the manager of the prospective new employee to read and amend. Once it is back, it is not uncommon for it to be run past either a manager or sent out to an HR consultant to check. That is hours of labour and potentially an additional bill for a specialist review.

Once the job specification and advertisements are done, you can add the cost of advertising into the mix. Then, if things go to plan, the CVs start to come in. With rising unemployment, you are quite likely to get an influx of CVs and applications for any job that has a wide potential candidate pool. So now you need to add in the cost of going through a pile of CVs just to discard the people who are not skilled or experienced enough for further consideration. Eventually, you get a list of the ones you think you may want to move to second-round consideration. Then you start reading the CVs at a more granular level to head towards a final-round decision for interviews.

So just the process of moving to the first round of interviews requires hours of input from a senior manager and potentially a number of other employees. All that has a cost in terms of the hourly rate for the people involved and the hidden cost of having people taking time out of their day instead of performing their own jobs.

More hidden costs

I am sure that the trail above is not something that you haven’t considered, but the amount of time involved in getting to interview still occasionally surprises people when they break it down. What is even more of a shock is how much potential cost is hidden in other areas. The truth is that the cost of hiring is significant. If you assume on average that you will run ten interviews for a job role, you could be looking at 20 – 30 lost hours to get to the offer, and double that if you include the hours not worked in their actual job. In effect, the loss occurs twice. Sixty hours of a management salary is a significant financial hit. So even if the first-choice candidate accepts their offer, the costs have really started to mount up.

If they don’t accept, or they turn out to be the wrong choice, then things can really get difficult when it comes to your next steps. You can re-advertise the job, but there is a problem with this. The job ad you put in is highly likely to be seen by exactly the same people who saw it before. The response to that is often one of wondering what was wrong with the job that nobody applied the first time round, or worse, that you have a high staff churn. That’s assuming that the ad is read at all and the candidates don’t just skip past because they saw it last time. You could re-write the ad, but then you are back in the cycle above. Whichever way you go, it’s adding to the bill, and reducing your chance of the right candidate appearing.

Bad hires

Now, here is the real shock. Using a recruitment partner means that the chance of a bad hire is reduced. Hiring the wrong person for a management position, for example, can result in an overall cost of over £130,000 according to The Recruitment and Employment Confederation. That is accounting for a number of factors such as the cost of replacing the bad hire, time wasted on training and support, the loss of productivity, and so on. In fact, bad hires could cost UK business billions every year. With a recruitment partner, not only does the bad hire percentage reduce considerably, but you will also have either a sliding scale rebate or a free replacement if the candidate doesn’t work out.


As you can see, the cost of the advertisement for the job is really just the tip of the iceberg. The real cost of hiring may not only be more than the fees for a good recruitment agency, it can actually be significantly higher, and you are missing on the support, guidance and safety net they offer.

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