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Employees are the most valuable intangible assets of every business, no wise business owner will ever argue that. Loyal and experienced employees are major contributors to the company’s success, stability and prosperity. In fact, not many businesses understand how important it is to keep their employees engaged and motivated.
Not only are satisfied and loyal employees more productive, they contribute a lot into overall company growth in the form of higher retention and lower turnover. Some companies spend lots of money on hiring and onboarding new employees, instead of keeping their employees satisfied with their job.
The cost of losing an employee can range from tens of thousands of dollars to double the employee’s annual salary.
According to a popular survey by Gallup, the cost of losing an employee can range from tens of thousands of dollars to double the employee’s annual salary (if you take into account the time that the new member of the team takes to reach the point of the highest productivity.) Therefore, reducing the hiring cost is a necessity for many companies. In this article, we’ll go through some of the most effective tips that will help you reduce your hiring cost and keep your employees engaged.
The main thing about the hiring cost is that it may change depending on the way a particular organization calculates it. When calculating the hiring cost, many businesses only take into account HR administration, recruitment agency fees, processing costs, and the cost of advertising. It’s important to consider a broader picture because these costs change depending on the role you’re going to recruit for.
For example, the median cost for recruiting a senior manager or director is about $7,800, while the median cost for hiring all the other types of employees is $2,600. The recruitment cost also depends on whether you decide to handle hiring on your own, outsource it, or combine these two approaches.
According to statistics, 30% of companies spend from $1,000 to $3,000 every time they hire an employee, and 15% of companies spend more than $5,000. If you imagine hiring ten or more employees in a year, you will see that the hiring process is quite expensive. If we consider the indirect costs associated with the onboarding process and training, such figures will look even scarier. Therefore, reducing hiring costs is certainly a good idea. However, if you want to reduce these costs, you need to focus not only on the hiring process itself but also on all the aspects that affect turnover.
You should understand why you need to hire new employees, in the first place, and how can you reduce the need for them. In this case, you cannot ignore the existing work environment in your company and employee engagement.
If all your employees were engaged, you wouldn’t need to hire new ones. According to this research, there are three categories of employees: engaged, not engaged, and actively disengaged. Engaged employees drive innovation and make the biggest contribution. Not engaged employees simply spend their time in the office. Actively disengaged employees affect others because their attitude undermines their colleagues’ motivation.
The research showed that 87% of employees are either actively disengaged or not engaged. Only 30% of American workers actually drive their companies forward, which is a big problem. Engaged employees see that most of their co-workers don’t demonstrate the same commitment, which leads to frustration that in turn increases the turnover. Employee engagement has a direct impact on turnover and therefore it’s one of the main factors that increase expenses associated with the hiring process.
87% of employees are either actively disengaged or not engaged.
However, low engagement affects not only recruitment and turnover. Actively disengaged employees cost American companies $450-$550 billion per year.
Organizations with high employee engagement have a 22% higher profitability, up to 65% lower turnover, and 21% higher productivity — John Baldoni in HBR
Therefore, if you want to save money, the first thing you should do is to create the right environment for your employees, making sure that they are happy. You should invest in their well-being and professional development. Here are more tips that will help you spend less on hiring.
When we choose a holiday destination or some restaurant, we either talk to our friends and ask them for advice or read online reviews. People who are looking for a job do the same thing: they ask their colleagues and friends about the employer, use LinkedIn and Twitter, and read various employer review websites to better understand what a certain company has to offer and how it treats its employees.
If you do your best to keep your employees engaged, happy, and supported, you can encourage them to share their experiences of your company. According to statistics, brand messages are shared 24 times more often when they are distributed not by the brand itself but by its employees. Therefore, advocacy can be a powerful yet cheap tool that will make your recruitment strategy more effective.
Make sure to hire the best candidates and focus on retaining them. Obviously, retention can help you reduce recruitment costs, especially given the fact that lost employees may cost you up to 150% of their annual salary.
Low retention rates not only lead to direct expenses caused by hiring new employees but also result in the decline of productivity, as you need to rehire and retrain staff.
Social media allows you to show others what your organization looks like from the inside. You can show who works for you and let others understand your values and vision. Authenticity and transparency will certainly increase the number of applications that you receive from people who share the same values.
Building a strong online presence doesn’t require you to spend a lot of money. You should just put some effort into delivering the right message to the right type of audience. Most companies consider LinkedIn the best platform for their recruitment efforts. However, nothing should stop you from using other platforms, as well.
Most hiring managers expect their candidates to negotiate salary, which is not the best approach. If you offer a good salary package at the very beginning, you’ll be able to save many man-hours and streamline the recruiting process. You can also increase offer acceptance if you add some flexibility to your compensation range.
Sometimes, hiring managers realize that they have many candidates for one role. Forgetting about these contacts once you’ve closed a position is simply a waste of talent. We recommend that you always build talent pools to be able to quickly approach the right people when new positions open up.
The whole hiring process will become much easier and quicker if you per-qualify candidates. The further a candidate goes through the process, the more you will know about him or her. You can also stay in touch with your alumni who’ve found a better job. They might want to come back to a new role or recommend someone.
Getting an overwhelming response to every position that you post allows you to build a talent pool but it doesn’t make choosing the right candidate easier. Analyzing hundreds of applications is a time-consuming task that quickly gets overwhelming and makes companies waste their resources. Focus on the most qualified candidates and make sure to have clear and detailed descriptions of the open positions.
When someone sees your job ad on social media, on your website, or a job board, it is their first and the strongest experience associated with your company. Therefore, you need to put some effort into creating an outstanding advertisement. It must be optimized for search, perfect in terms of grammar, and compelling.
Make sure to clearly outline the key responsibilities and requirements. Be honest and don’t mention a degree if it’s not actually necessary for a job. If the job can be part-time or allows for flexible hours, don’t forget to mention it.
There are many programs for hiring managers and employees that allow you to automate many cumbersome tasks, eliminating human error and improving the overall efficiency of your recruiting efforts. You can automate such tasks as social messaging, post-application messaging, FAQs, and nurturing workflows. Automation also enables you to screen countless applications, using keywords.
We hope that our tips will help you improve your hiring strategy. Don’t forget that the easiest way to reduce hiring costs is to retain your employees and to make sure that the best talent won’t look for other job opportunities. Therefore, we recommend that you focus on improving employee engagement, support, and recognition.
Rhonda Martinez is an education and psychology blogger, content writer and editor at LegitWritingServices.com. She has a keen interest in industrial-organizational psychology and is always on the lookout for best practices of improving work processes and environment.