Employers seek to reduce recruitment costs

Employers are looking for ways to reduce their recruitment costs in the wake of the economic downturn, according to a recent survey by Personnel Today’s sister organisation, pay specialist IRS.

The survey of 143 employers – covering a combined workforce of almost 489,000 people – found that employers were typically reviewing four main areas of their recruitment procedures in an attempt to save cash, such as the use of advertising, deciding whether or not to fill certain vacancies, the cost of agency fees, and candidate selection procedures.

The areas receiving the most attention were found to be:

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  Finding alternatives to recruitment advertising (73.5%)


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  Reducing the use of agencies or other suppliers, or getting better value for money (71.3%)


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  Improving the cost effectiveness of recruitment advertising (71.3%)


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  Tackling recruitment budgets and staffing (58.1%)


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  Imposing recruitment delays and freezes (54.4%).

However, recruitment freezes – which have been imposed by 32% of employers – can have an adverse effect on staff morale, workloads and stress levels.

One business software company in the survey said: “Recruitment freezes always end up increasing recruitment expenditure in the end. As vacancies are taken off freeze at the same time, the recruitment team becomes over-stretched and has to rely heavily on agencies to fill vacancies quickly.”

In total, the survey identified 50 specific areas of recruitment practice that employers are reviewing in a bid to cut costs. But the three most effective ways of doing so were found to be reducing agency fees and charges, recruitment freezes, and closely reviewing all vacancies to ensure that only the key posts are filled.

The findings also showed that the average employer saved 10% to 25% on its recruitment expenditure in the past year as a result of their efforts.

In terms of perception, 11.8% said their cost-cutting initiatives had been very successful, while 54.4% believed they had been fairly successful. But 5.1% thought their efforts hadn’t made any difference, and 2.2% claimed they had actually been counter-productive.

Just over half the employers surveyed are expecting further spending cuts in the coming year, with the typical amount predicted to be between 25% and 50%.

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Most effective ways of reducing recruitment costs

Rank	Action taken
1	Changes to use of employment/recruitment agencies
2	Recruitment freezes
Joint 3	Ensuring only essential posts are filled joint
Joint 3	Shifting recruitment away from employment agencies towards online recruitment
4	Moving job advertising from printed publications to the internet
Joint 5	Appointing someone to manage recruitment
Joint 5	Greater use of internal recruitment among existing staff
Joint 5	Introducing an employee referral scheme
Joint 5	Reducing the size of printed advertisements
Joint 6	Improving an existing employee referral scheme
Joint 6	Introducing a software-based recruitment administration system
Joint 6	Making line managers accountable for recruitment spending
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Source – IRS Employment Review