To Reduce Costs First You Need To Know The True Spend; Here’s How To Calculate It For HR And Recruitment
In a working world driven by rising costs, we’re all being asked to take on more whilst also feeling the pressure to reduce team size and streamline expenses. Striking the right balance is a real challenge and identifying the true cost of Recruitment and HR functions is key when conveying your value to the business.
Whenever we are engaged to analyse Recrutiment and/or HR spend on behalf of a client, we always identify hidden costs that our clients did not consider. Without knowing the actual cost, how can you identify opportunities to reduce leaky budgets, overspend and more importantly – protect and divert cash to where you really need it?
Where do you start? And how can you be sure to identify these hidden costs?
1. Team Costs
When you consider your team costs, if you are only calculating the salary costs of those in your Recruitment or HR function, your calculations are already going to be falling short.
You also need to consider additional ‘on-costs’ such as:
- Contributions to pension plans
- Employer National Insurance (which as we know is increasing)
- Benefits
- Hardware, i.e. laptops and mobile phones
- Software, i.e. Microsoft licences and intranet platforms
- Office space, utilities per head etc
All of these ‘oncosts’ are often overlooked and accumulate to a substantial cost for the business.
There may also be people who contribute to Recruitment and HR processes but don’t sit within the functions themselves, for example Administrators or Hiring Managers. Don’t forget to calculate both the cost and on-costs of their time in order to get an accurate total value.
2. Technology and Tools
The cost of technology and any tools required by teams is often overlooked when calculating true overall spend. For example, technology and software such as:
- Applicant Tracking Systems
- HR Systems
- LinkedIn Recruiter Licences and job slots
- Job boards
- Electronic document signing subscriptions
These are all essential for modern HR and Recruitment functions, but soon add up.
Evaluating your tech will help create a clearer picture of actual function cost, and if you need help, our Recruitment Spend Audit can take care of the work for you whilst also identifying opportunities to optimise spend.
Don’t forget to include the cost of any referral / incentive schemes you run internally here too.
3. External Partners
Many Recruitment and HR functions engage external partners to support their day-to-day operations in some shape or form. In the Recruitment space, this could be Recruitment agencies sourcing candidates or assisting with supply of temporary workers. In the HR space, it could be external HR consultants, employee assistance or ER lines, or training providers.
The actual fees charged by all of these providers should also be calculated in order to identify the full cost of the delivery model.
If you find yourself in need of a helping hand, our Recruitment Function Diagnostic and HR Function Diagnostic services take a deep dive into your functions and providing a thorough review of current spend, plus recommendations of the most cost-effective operational models for your business.
For any other queries, or if you’d like to discuss our services, reach out to us today for a free and impartial conversation.
