Poor recruitment practices have a much bigger impact on your business than simply slowing down time to fill open requisitions. Bad hiring tactics could cost you top talent, and in a tight labor market, you can’t afford to take that risk. Your recruitment practices have the power to elevate your organization — or produce bad hiring decisions and drive poor company culture.
Calculating both direct and indirect costs of bad recruitment processes is important for evaluating and improving your practices over time. Direct costs are what you can measure and see while indirect costs are the factors that are harder to quantify. Direct costs are easier to calculate than indirect costs, especially if your applicant tracking system (ATS) allows you to monitor your metrics and KPIs.
Both direct and indirect costs can take a toll on your bottom line. Here are some common recruiting mistakes and the impact they could have on your cost of hiring.
Treating Recruiting as Gatekeeping
Thinking of recruiting as a gatekeeping function can put significant limits on your ability to make the most of new talent. “Once you reach a candidate that you’re genuinely excited about, the gatekeeper part has to go away,” says Josh Rock, talent acquisition manager at Nuss Truck Group Inc. The gatekeeping mindset can lead to setting unrealistic expectations for candidates, which can have a severe impact on your bottom line.
Asking too much from candidates — such as more experience than they can realistically have or too many degree requirements — may cause them to write off your job postings as unattainable.
“The direct cost of this is losing the opportunity to recruit top talent and scaring away candidates who see impossible job descriptions,” says Cornelius Fichtner, president of OSP International LLC. Exclusionary job advertisements can cost you potential hires that could drive your business forward or may result in hiring the wrong person altogether — which can cost 30% of your employee’s first-year earnings, according to the U.S. Department of Labor.
It can also drag down employee morale, Fichtner says, since holding candidates and employees to standards they can’t possibly attain can be demoralizing.
Being transparent can prevent you from hiring the wrong person for the job and can serve as the gatekeeping function so recruiters can focus on becoming navigators. “The natural gatekeeping is going to happen by the candidate and the hiring manager,” Rock says.
Think of recruiters as navigators here to help candidates find their careers in your business. Focus on the good they can bring to the business and consider where their strengths can add the most value.
Adding Needless Steps to the Process
Adding too many steps to the hiring process increases time-to-hire and creates a poor candidate experience, which can cause qualified candidates to back out voluntarily. Drawing out the interview process over weeks, for example, or waiting for all team members to get a chance to review each candidate severely slows down the process, producing significant but unnecessary costs.
“Those unnecessary steps in the recruitment or hiring process only plague the organization,” Rock says. “If you don’t have enough staff to manage the influx of candidates or you’re bogged down by needless processes, you’re going to lose candidates.”
Human resources teams can streamline the process and reduce time-to-hire by evaluating which stages in the hiring process are producing bottlenecks. Your ATS can reveal where most candidates drop out, for example. Use that data to re-evaluate the recruitment timeline and consider which steps are essential — and which are dispensable.
‘Spray and Pray’ Recruiting Practices
“Spray and pray” recruiting tactics are common but put significant pressure on your processes without driving results. “‘Spray and pray’ is when bulk, templated outreach is sent out to 100-plus candidates, hoping for a small handful of responses expressing interest,” says Emily Meekins, CEO and founder of workstrat LLC.
This can have a huge impact on your time-to-fill metrics, driving up recruitment costs. “The volume of outreach creates an illusion of traction,” Meekins says, “but often this approach delays time-to-fill — as opposed to personalized, custom outreach that's geared towards a select group of prospects aligned to the opportunity.”
Continually putting out job advertisements with no strategy for driving impact results in high costs per hire. Your ATS can help you calculate the true cost of poorly performing recruitment campaigns. Use your ATS to monitor ongoing campaigns. Pull reports from your vendors to identify the best keywords and the time and placement of your advertisements that have the biggest impact.
“Spray and pray” recruiting drives up indirect costs by deteriorating your employer brand. “Every touchpoint is a reflection of your brand,” Meekins says. “If you're blasting out emails and your response rate is less than 10%, it's not a great first impression.”