Very few organisations have calculated the true cost of recruiting. Most management teams know that it is costly, which is one reason why HR managers are evaluated on metrics such as how long positions are empty, but the actual cost of not having a position filled, finding the right candidate, interviewing them and negating their contract, is not something most businesses add up.
The average time-to-hire in the tech industry is 47-57 days. The reality is that senior, specialised, competitive positions take more than double the amount of time to fill, particularly in candidate-driven technology markets where finding talent is incredibly hard to find.
Total recruitment cost is directly related to the amount of time spent recruiting, including HR time, management staff, etc. Additionally, there are the overhead costs that accumulate the longer the job is open—for example if you have to get temporary staff in, or pay bonuses to individuals who are working longer hours to compensate.
Here we walk you through some of the costs associated with a $100k salaried position, with 30 candidates, over a 3-month period to give you an indication of how expensive it is to find and hire top talent.
HR Management Time
Before anything else, HR and internal staff will spend some ‘upfront’ time to advertise for the position and do the first round of candidate selection. This includes writing job descriptions, posting them, management of the job boards & applicant tracking software, LinkedIn searches and reading resumes / CVs. This can be incredibly time consuming, and as such costly.
Interview Time
A commonly overlooked cost area is the amount of time spent interviewing. Even though you are eager to fill seats fast, no one wants to waste time. Telephone screenings are still a must, or video-call screenings such as we do at Oliver Parks.
We estimate your company will spend 72 hours interviewing for a position such as this one – and this assumes you fill the position. The longer it drags on, the more interviews you will perform, increasing the amount of time spent. There is also the time of coordinating interviews, scheduling them and rearranging them.
Software Costs
There are many options available to post jobs from Indeed, to Monster to LinkedIn. And there are lots of different types of software ranging from technical tests to AI pre-screening programmes. Depending on what you use and your package, the costs can really add up. Assuming you use more than one job advertisement channel, and at least one type of software, your cost in this area will most certainly be in the thousands.
Additional Workload / Team Fatigue Costs
Who is paying the price for this position not being filled? Are there longer days and late nights for existing staff? Are the unsuccessful interviews making management feel broken? This may seem extreme, but these situations are very real and only become amplified as the position fails to be filled. The cost of this is difficult to quantify, but it can be very expensive, particularly if mistakes are made or deadlines are missed.
Costs of Taking Too Long & Getting It Wrong
Opportunity Cost – How much further along would the business be if hundreds of hours and thousands of dollars hadn’t been spent trying to fill this position? What has been sacrificed by not filing this position in 30 days compared to 90 days?
Last Minute ‘No’s’ – In competitive candidate markets, top talent will often take another job at the last minute as they will be in high-demand, and receiving offers from competitors. This kind of set-back costs thousands.
Having to Settle – Perhaps the most damaging cost is the one of having to settle for a less-than-ideal candidate because you can’t find the talent you need. The wrong candidate can cost tens of thousands.
All of these costs add up to an eye-wateringly high number—but it isn’t the single, total number that is the problem, it is the fact that the costs can vary widely. This is in contrast to hiring a recruitment firm, who will most likely have a set fee for finding you the right candidate.
So before you embark upon trying to hire another employee on your own, think about contacting a well-regarded search-based recruitment firm. Not only will you avoid surprise costs, but their expertise will help to ensure you are able to interview individuals you would have never known existed.
About Oliver Parks
Oliver Parks offers search-based recruitment solutions to the technology sector, specialising in the ERP, CRM, CMS, ECM, BI and Open Source Technology spaces. The firm’s multilingual consultants operate in narrowly-defined niche market segments, enabling them to gain extensive knowledge of the people and companies operating in each technology. Oliver Parks has a proven track-record with more than 100,000 candidates worldwide and more than 300 clients globally.