The cost of recruitment

According to research by LinkedIn, 50% of talent professionals expected their budget to decrease in 2021. One way to increase how far the available finances will stretch is to minimise the cost of recruitment.

How can HR and TA teams measure the typical costs within their business and, more importantly, how can they make savings while still attracting the best talent for the company?


The true cost of recruitment

When we talk about the cost of recruitment, the cost per hire is one obvious element. But the cost to the business is much wider than this, with many different factors making up the whole cost of recruitment. These include:

Cost of hiring

This comprises the actual spend for job adverts, psychometric tests, recruitment agency fees and other expenses, but also includes staff time (both for HR/ TA teams and recruiting managers), as well as the cost of any temporary staff to cover the vacancy.

Estimates for this cost can vary widely. CIPD estimates the average cost of filling a vacancy, including labour costs, is £6,125. For a manager role, these figures rise to £19,000.

However, that figure can be significantly higher for more senior roles, especially if recruitment is outsourced. Recruitment agencies can charge 20-30% of the salary, which for a role commanding a salary of £120,000 would equate to £24,000 to £36,000 simply on agency fees.

Cost of empty chair

Data suggests that the typical time to fill a role in the UK is 48 days in the UK and Ireland and 43 days in the US. This can vary widely though, depending on the seniority of the role, the skills required, local competition and the job market overall. Some roles can prove very hard to fill.

However, the time to hire can be much shorter than the time to fill. Recruiting managers may not immediately notify HR about vacancies. And at the other end of the hiring process, companies often need to wait for candidates to work out notice at their current employer. All of this can add a significant amount of time.

Throughout this time, the business will be losing revenue, either directly for an employee who is income-generating, or indirectly for roles in a support function, where other employees may need to step up and cover, which can impact everything from sick leave to employer brand perceptions.

This is an area that HR and management teams recognise. A recent survey showed that 14% of businesses have increased their focus on retaining talent. However, a certain level of turnover is inevitable and often healthy, so these costs cannot be minimised completely.

Cost of productivity for a new starter

While new employee gets up to speed, there will be a loss productivity vs the previous post-holder who knew the job well. Time and costs are incurred throughout the onboarding process, as managers bring employees up to speed about the role. This can take 1-2 months, which equates to a direct drop in income and profits over this time.

The time investment in onboarding will be worthwhile though, as ensuring a good process can help with retention rates. Research shows that as many as 43% of new hires leave their role within 90 days. This obviously escalates the costs of recruitment significantly – with lost time and resourcing for onboarding, not to mention incurring recruitment costs for a second time. Even worse, the cost of an empty chair may be even higher, as new recruits may be on a shorter notice period during their probationary period.

And it’s not only on the employee side where there are issues. New research shows that 57% of hires made in the last 12 months weren’t working out in some capacity and 25% weren’t working out at all. The top reasons were poor fit for the role (46%) and poor fit for the culture (44%).

Data shows that the cost of a poor hire at mid-manager level with a salary of £42,000 can cost a business more than £132,000 to resolve, so it’s essential to get the right person for the job.

Cost of lost knowledge and expertise

This is not often discussed, but when established or expert employees leave, the business loses their knowledge. This has a hidden cost to the business but is almost impossible to quantify. Again, a focus on retaining your top employees is key. Ensuring adequate documentation is in place can also offset some of the impact of this loss of knowledge.

Ways to lower the cost of recruitment

There are many ways that companies can make recruitment more cost effective.

Reduce the cost per hire

Data shows that hiring costs can vary from 12% for an in-house team to 22% and up for an agency-led solution. As in-house teams become increasingly stretched, it is often necessary to outsource recruitment. However, there is an alternative to the traditional recruitment model and its associated percentage fees.

Talent mapping and talent search can be much more cost-effective, allowing businesses to have full sight of the best talent in the market, regardless of whether they are actively seeking a new role. In addition, our costs can be significantly lower, as they are based on the work required rather than a percentage of the salary. As an example:


In addition, we don’t charge placement fees, so companies can fill multiple roles without incurring any additional costs. Here are a few of our case studies which demonstrate how we have saved our clients significant sums while finding the best talent in the market:


Saving time and money on recruiting senior specialist roles

We saved our client £36,500 vs a traditional approach and provided valuable business insights to guide their strategy.

Learn more

Recruiting for a strategically important role

Our client was looking to recruit a Knowledge Manager, a newly created role within the organisation. We were engaged to find the best available talent for the role.

Learn more

Filling a role which had been vacant for over 6 months

Our client was struggling to fill the role and believed location and a lack of local talent was the issue. We challenged these perceptions and within six weeks had found the ideal candidate.

Learn more


Recruiting for a key role to lead transformation

Our client needed to find a senior leader to manage a key aspect of the transformation and asked us to carry out a global search to locate the right person.

Learn more

Successful recruitment for a hard-to-fill role

We filled the role in just five weeks and our insights led to a change in messaging to better fit the market.

Learn more

Speaking to the best talent in market

Our client reduced their costs by over 50% while gaining an understanding of the market and successfully filling the role.

Learn more

Increase staff retention and lower turnover

There are many ways to improve staff retention: providing clear career progression, investing in training, offering the right benefits, supporting staff’s mental health and clearly communicating a vision for the future of the business. The latest figures show that, after a quiet 2020, resignations have climbed to almost the same levels as before the pandemic hit, so now is a good time to look closely at retention.

However, one of the key elements that can affect retention is right at the start of the process: finding candidates who are a good fit for the business. This minimises the initial turnover through the honeymoon period and helps ensure that employees will stay for the longer term. Finding people with the right cultural fit is as important as getting the right skills.

By having a broad talent pool and reaching out to passive candidates, companies can increase the choice of quality candidates and improve the chances of finding someone who is a great fit for the business. See how we help our clients to do this.

Look at a global talent pool

Finally, with a rise in remote working, opportunities are opening up to widen locations, which can help to reduce the time to hire for specialist roles where skills may be in short supply locally. If your business is located in a capital city, it may also be possible to reduce the cost of additional salary weighing by recruiting an employee to work remotely. Data from Mercer shows that 30% of businesses are considering location as a way of managing talent availability and cost.

Find out more about the benefits of global recruitment.

How we can lower your cost of recruitment

We help clients with many aspects, including:

  • getting the best talent with the right fit for your business
  • helping companies recruit for hard-to-fill roles and reducing empty chair costs
  • saving on recruitment costs overall vs traditional recruitment agencies

We’re always happy for a no-obligation chat to see how we could help your business.