In House Recruitment VS Recruitment Agencies: The Hidden Costs

Date: 22nd Aug 2016

The cost of recruitment can be far-reaching and many businesses don’t even realise the full extent of the costs and the impact that an in-house recruitment campaign can have on productivity. Recruitment Agencies provide a fully managed solution that is often much quicker than recruiting in-house and have access to a much wider pool of suitable candidates. The end goal is always the same no matter how you choose to recruit; finding the right person for your business, it’s up to you to decide how you want to reach that goal.

It’s often assumed that recruiting in-house is the cheaper option when it comes to hiring new people, with recruitment agencies conjuring up images of huge agency fees and ongoing hidden costs, but is that accurate?

Many people will have an idea in their mind of how much a recruitment campaign is going to cost them before they begin, but they often neglect to think of the unexpected or indirect costs that in-house recruitment can incur, and even those costs are based on the assumption that the recruitment campaign is successful the first time around, which we all know isn’t always the case.

There are a number of reasons why in-house recruitment may not be successful the first time around. Not all businesses have the time or resources to recruit properly which means their campaign may not have the desired impact and therefore not attract enough of the right people for the role. Studies have shown that candidates who are already in the market, i.e. signed up with agencies, searching for vacancies and present on job sites or databases, make up only 20% of qualified candidates in the marketplace, and to access all of that 20% you’d have to be using every single agency, database and advertising platform available, which just isn’t possible.

This limited access to suitable candidates can really affect the quality of hire during a recruitment campaign and can result in a business having to run a campaign multiple times in order to find the right person. This may not sound like an expensive task, particularly if you are advertising your vacancy through social media and job sites that enable you to advertise for free, however it’s the indirect costs that people often neglect to factor in.

For example, the time it takes to hire is often ignored as a cost but in reality it forms a big overhead. Assuming the recruitment is reactive, the role that is being advertised is unfilled which means for the duration of the time that you are recruiting, that particular job isn’t being done. This means there is little to no productivity and any productivity is achieved by diverting existing staff or managers or relying on contract labour, all of which incurs an overhead and is diverting productivity from elsewhere in the business.

Hiring times are generally longer for in-house recruitment campaigns than they are when using a recruitment agency. This is due mainly to the difference in access to suitable candidates. A recruitment agency will have an existing pool of candidates on file as well as good strategies in place to find and resource new candidates. All of the staff at a recruitment agency are there to do one job; recruit, which prevents the lack in productivity that may occur if recruiting in-house. In-house recruitment means that managers and personnel staff need to take the time to read applications, shortlist candidates and hold interviews which diverts them from their other duties (and is often ignored as an indirect cost) while a recruitment agency can do all the shortlisting and vetting for you.

 If you are interested in how Starting Point Recruitment can assist with your recruitment campaign, give us a call on 01922 422480 or email