How much does it cost to recruit?

Recruitment is a key part of growing any business, which means recruitment costs can be among an organisation’s biggest outgoings. But what is the cost of recruiting new employees in the current market?

Total cost per hire will vary depending on your chosen method. Here, we explore ‘how much does recruitment cost?’ and draw price comparisons between recruitment agencies and in-house hiring.

How much do recruitment agencies cost?

Outsourced recruitment involves employers using external agencies to source compatible talent for their vacancies. Job agencies are made up of experienced recruitment consultants, who are known to charge a premium for their services. But how much does it cost to recruit via and agency, exactly?

Recruitment agencies base their fees on a number of factors. Some charge in advance, while others calculate fees once a successful candidate has been placed, which means you won’t necessarily know cost per hire until towards the end of the hiring process, making accurate forecasting challenging.

Salary-based agency fees

Many recruitment agencies charge for the cost of recruitment based on a percentage of the successful candidate’s first annual salary. This means fees may be considerably higher when recruiting for more specialist, hard-to-fill roles. As a result, there’s no one set answer to ‘how much do recruitment agencies cost?’, unless they charge upfront fees – more on this in a moment.

Comparison site Agency Central estimates an average fee of between 15% and 20% of each successful candidate’s first annual salary. That means a cost per hire of £4,300 per candidate for those earning the UK’s average yearly wage.

Up-front agency fees

Some recruitment agencies charge employers an up-front fee for their services. This may be a one-off payment, or a retainer, which is topped up with later instalments once a successful candidate is placed.

How much does it cost to recruit in house?

In-house recruitment is often viewed as the cheaper option for employers, especially when facing rapid workforce expansion, or large hiring campaigns. 

The fees associated with in-house recruitment include advertising costs, staff hours dedicated to hiring, and hiring software subscriptions (such as to an applicant tracking system).

While up-front payments for software subscriptions may outweigh advance agency fees, there’s often significantly cheaper cost per hire to recruit internally.

How to reduce cost per hire

Moving recruitment in-house can be one way to reduce cost per hire. While there is a cost associated with hiring software and other tools, this is an outgoing that can be built into your monthly forecasts. In contrast, recruitment agency fees can vary significantly, depending on the nature of the role being filled, making the cost of recruitment more unpredictable.

While often viewed as a more difficult alternative to agency recruitment, in-house hiring doesn’t have to be a challenge. By using accessible recruiting software, and best-practice hiring methods, you can reduce your reliance on recruitment agencies for good – saving time, and cutting cost per hire.

Recruitment costs can be saved elsewhere when you’re using the right software. For example, automated candidate screening, reference checking and even email updates mean HR time can be used in other areas, improving efficiency. In addition, automated CV screening means HR won’t be wasting any time (and therefore money) on unsuitable applicants progressing through to the interview stage.

Applicant Tracking Software

An Applicant Tracking System (ATS) enables employers to keep track of even the largest recruitment campaigns – all from one user-friendly dashboard.

The platform automatically collates candidate information from application forms, letting you screen, filter, and progress your strongest applicants easily. What’s more, many of the latest ATS platforms include tools such as video interviewing, contact automations, and advertising management, making it easier than ever to recruit in-house.

This additional level of visibility over the end-to-end hiring process can lead to a reduction in recruitment costs, as each stage will be significantly streamlined thanks to automation, improving time to hire too.

Market your unique employer brand

Your employer brand is your company’s selling point within the job market. This is what first attracts new candidates to your vacancies, and encourages existing employees to stay with you.

Identify the key values that make up your workplace culture; survey your employees to find out why they choose YOU over any other employer – what is it that makes you an ‘employer of choice’? These are the factors you should be promoting across future hiring campaigns, attracting like-minded, compatible talent to join your team.

But how does this impact recruitment costs? Showcasing your unique brand allows candidates to determine whether they’re the right fit for your company at the application stage. This means there’s less chance of unsuitable applicants getting too far into the process, potentially wasting time, money and resources.

Discover gamified employer brand & EVP analysis with Talos Engage

Introducing…

Talos ATS: Manage your recruitment costs with talent technology

Manage the cost of recruitment more efficiently with Talos ATS, our all-in-one recruitment tool.

The platform combines the latest applicant tracking solutions with intuitive automations, recruitment advertising tools, and even remote hiring tech.

Manage the cost of recruitment & make hiring easier

Talos is an all-in-one solution to in-house recruitment, making it easier than ever for employers to centralise their hiring process, reducing their reliance on recruitment agencies and the associated cost per hire.

This not only reduces overall recruitment costs, but helps to instil your brand values and workplace culture into your hiring campaigns. And who serves as better advocates for your employer brand than your own hiring team? Using Talos gives your HR team full control over the candidate journey, ensuring new recruits get off to the best start possible with your brand.

Discover an easier, cost-effective way to recruit the best new talent: