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The Hidden Costs of Doing Your Own Recruiting

The prospect of finding and hiring an employee on your own seems straightforward enough. You identify the role you need to fill, you set up a list of criteria required for the job, you post your opening on a job board, and then you make your hire.

Of course, anyone who’s ever tried hiring knows it’s not this simple. Perhaps even more importantly, it’s also rife with hidden costs. It is crucial for any hiring manager to understand these before undertaking the hiring process. What exactly are the hidden costs of doing your own recruiting?

It’s not a precise science, of course. Every hiring situation is different because it depends on chemistry between your applicants and your own organization. But time and time again, we talk to business owners and hiring managers who tell us about all the unexpected costs they encountered along the way: posting, screening, and background checks are of course pricey. But there’s also the time spent when candidates ghost you, the institutional knowledge lost due to turnover, and—heaven forbid—the cost of making a bad hire.

Recruiting Is Not Cheap—Or Easy

Doing your own recruiting is often incorrectly believed to be less expensive than working with a professional recruiter. This is because most hiring managers don’t know what they don’t know when it comes to hiring—they don’t have the experience professional recruiters do, so they are unaware of the minefield of potential costs out there if you don’t have an airtight recruiting process in place.

Forget for a moment about the (mostly) nominal fees attached to criminal background checks and ID verification—the real money pit is in the time you’ll lose.

You need to account for sorting resumes and comparing them to your job description (you do have one written, right?). You’ve got to take the time to accurately post your job listings in the right places, and make sure the right candidates are seeing them. You then need to organize, conduct, and evaluate interviews. If you are paying someone to do this work—or if you yourself are doing it—you must account for the wages being dedicated to the recruiting process. Essentially, you are paying an amateur recruiter your own wage to do professional recruitment work. Why?

The Cost of Making a Bad Hire

We are always blown away when we hear how many bad hires are made without proper reference or post-offer background checks, with the only reason being that they take too much time. The average “time to fill” following a bad hire is 53 days. That means nearly two months without the production you would’ve gotten had you hired the right person in the first place. Your organization’s mileage may vary, but we don’t know of too many companies that can thrive with that kind of production loss. Post-offer background checks are one of those things a professional recruiter would never skip, but employers often do because they can feel like extra work.

Consider the overall cost of making a bad hire, compared to paying more in compensation to a good one. The average cost of a bad hire for non-executive positions is $4,561 (this is just for direct costs like advertising, the cost of your HR department’s time, third-party agencies, travel expenses, etc.). The Department of Labor estimates that the average cost of a bad hire can equal 30 percent of the individuals’ first-year earnings—and that’s to say nothing of workplace culture costs, including the negative impact on other employees who will have to pick up the slack for the under-qualified candidate you hired. In most cases, hiring the best candidate you can afford, at a wage they deserve, is the best policy. 

Ultimately, the stakes of making a good hire are much higher than most employers realize, and the costs associated with making that hire can be startling if you’re not aware of the risks of getting it wrong. If you want to make sure you are hiring the right applicant and that you’re not incurring unnecessary costs while doing it, we’d love to chat with you and guide you in the right direction. Let’s talk!

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