There is a phrase frequently used in business settings to justify certain expenses: sometimes you need to spend money in order to make money. In many situations this makes perfect sense, like upgrading technology to improve efficiency or hiring a web developer to create your company website. However, this statement can also be a bad excuse for spending money without good justification, such as sponsoring an event that none of your customers would ever attend. So where does a recruiting firm fall in this analogy?
Does it make good business sense to spend money on outsourcing this service? Will doing so provide a clear return on that investment in who you hire and how?
Spoiler alert. Unless you are a very small business, it does. But do yourself a favor and continue reading to learn how recruiting firm services can benefit the bottom line of your business.
5 Ways a Recruiting Firm Supports Your Bottom Line
1. Promotes better allocation of resources
Good resource management means paying attention to where those resources are allocated in the first place. It doesn’t make good business sense to invest in areas that aren’t going to deliver the best return for your efforts. If you are currently managing your talent acquisition process yourself, think for a moment about who is handling (or maybe juggling) all the moving pieces this includes. What do their responsibilities include?
Large organizations are fortunate to have an actual Human Resources department and maybe even someone specifically responsible for recruitment efforts. However, that doesn’t mean your internal recruiter is sourcing passive candidates. More likely they are busy sorting through resumes submitted directly that have to be reviewed for relevance.
As a smaller business, the manager of the department adding new talent may be the one handling these responsibilities. Are you really expecting them to source, recruit, evaluate, and interview candidates in addition to their other projects? How effective is that going to be?
Using a recruiting firm allows your business to allocate resources to the areas you excel at. When your time and focus are placed on tasks outside of your core competencies it will take you more time and therefore more cost to your company to complete.
2. Sources higher quality candidates
A recruiting firm can provide hiring companies with higher quality candidates than what they may typically find or naturally acquire on their own. There are two important reasons why.
First, too many companies limit their pool of available candidates with industry-related, geographic, or stereotypical boundaries. An experienced recruiting firm knows when, where, and how to look beyond those restrictions.
Second, when evaluating candidates isn’t something you do with great regularity, the natural tendency is to review qualifications against a list of desired competencies. This is the knowledge someone has to perform in a particular role. While important, measuring candidates against these criteria only ignores a large pool of candidates with exceptional capabilities. These are individuals with proven accomplishments because of how they have applied their expertise.
Having access to a larger, more diverse pool of candidates with a greater range of applicable abilities means having quality candidates to consider for your hiring decisions. Better candidates mean better, more talented hires. Who doesn’t want the best possible talent working for them instead of the competition?
3. Reduces the risk of a bad hire
When a recruiting firm helps you source better quality candidates, they will also reduce your risk of making a hiring mistake. We want to immediately point out the use of the word, reduce, not eliminate or guarantee against all bad hires. They happen, unfortunately. However, part of improving your bottom line is reducing elements that could cannibalize it. Reducing high-cost risk is a great way to help your bottom line.
A bad hire incurs lost compensation costs, opportunity costs, negative perceptions of your company culture, productivity costs, talent acquisition costs, as well as external business costs. A recruiting firm will help you clarify your employment needs, define your hiring process, and set your qualifying criteria.
Most bad hiring decisions are the result of several missteps in a company’s hiring process. Fortunately, this is also where the services of a recruiting firm excel. Lower failure rates mean better hiring results and improved company growth.
4. Avoids long-term position vacancies
Vacant positions negatively impact your bottom line. They place more work on existing employees, frustrate customers and clients due to reduced service levels, and contribute to lost revenue in missed opportunities. So how can a recruiting firm avoid all of this?
In a word, efficiency. In the first point, we reviewed allocating resources to where they produce the best outcomes. A recruiting firm will naturally have competencies in sourcing, recruiting, and evaluating talent — both active and passive candidates. This expertise allows us to find quality candidates faster than our clients can alone. Less time with vacant positions means more time with your business operating at full capacity and productivity — a positive impact on your bottom line.
5. Maintains proactive workforce planning
Starting and stopping any project or initiative will always result in more time and effort overall than if the actions had been consistent (even if the pace is slowed) all along. Just ask anyone trying to get back into the habit of exercising again. Working directly with a recruiting firm allows a continuous process of recruiting, hiring, onboarding, and developing talent.
This forward-thinking approach to maintaining business momentum also allows organizations to take advantage of business changes from a proactive versus reactive approach. From planning to consulting on industry trends, a recruiting firm can help you stay on the leading edge of employment demand shifts, instead of watching marketplace changes and wondering how to react.
Using a Recruiting Firm Adds Up
Yes, we do believe that using a recruiting firm comfortably fits within the positive category of business expenses because of the positive value this service has on your business. Our proactive approach to talent acquisition and development means greater control and management of business resources, candidate quality, hiring risk, and efficiency and continuity in talent acquisition efforts.
The bottom line is that a recruiting firm can help companies make better hires. Better hires mean more productive employees, and more productive employees mean higher profitability. Conversely, they prevent making bad hiring decisions or reactive plans to labor market impacts which are usually far more costly than companies expect.