A director s guide: 10 tips to cut recruitment costs. An information guide from Access. consulting software solutions

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1 A director s guide: 10 tips to cut recruitment costs An information guide from Access consulting software solutions

2 Overview Whether you re an employer, agency or job seeker, the recruitment market has never felt so tough. Economics, legislation, Government and globalisation have all combined to create a perfect storm of uncertainty, where fewer jobs exist and many more people are applying for them. So where s the pressure coming from? Factors include more people applying for jobs outside the UK, more graduates, plus an increase in people staying in, and applying for, jobs beyond 65 to name but a few. So what does this mean for HR managers? You may have seen a huge surge in applications for jobs within your own organisation. If so, you ll know that quantity doesn t necessarily dictate quality. Moreover, the pressure to fill positions can increase the pressure on HR, with admin costs increasing in proportion with every CV. Latest figures from the CIPD s 2010 Annual Survey Report back this up, with twothirds (68%) of organisations experiencing recruitment difficulties 1 and seventy-six per cent of organisations noticing an increase in the number of unsuitable applicants. 2 Purpose of this guide Measures to reduce recruitment costs are well documented. In fact, you may have already tried to integrate costcutting methods into your recruitment strategy, such as the renegotiation of agency fees. However, the purpose of this guide is to focus on the role of technology, specifically, how HR software can help you gain greater return on your recruitment spend. By the end, you should have a good understanding of how to calculate the total costs of recruitment, the benefits of HR software and the specific features to look out for when evaluating your existing systems. Throughout this paper, we will draw on the findings of the CIPD s 2010 Annual Survey Report. First, let s consider the basics: how to establish what recruitment is currently costing your organisation. The complex cost of recruitment Advertising and agency fees are just some of the factors that come to mind when trying to list out recruitment costs. But in order to get the full picture, we need to consider both direct and indirect costs: Direct costs Gathering even basic ( direct ) costs of labour turnover comprises several factors. Take leaver s costs for example. Do you know how long it takes your staff to amend payroll and pension records? What about selectors time (e.g. the hours spent by line managers in interviews)? Here are some more examples: Leaver s costs (amending payroll and pension records, updating personnel records, supplying references) Recruitment advertising Paying an agency to put forward the recruit Selector s time (short-listing, interviews) could be more than one person. In the public sector for example, this would involve the resources of an entire panel including senior managers and directors HR administration (sending s, writing letters, organising contracts, preparing tasks, printing documents) Induction costs (training, handover, on-boarding). Indirect costs On top of this, we have the indirect costs of labour turnover, which can be difficult to quantify. These include costs to the business such as loss of sales, customer service or reduced output. Assessing the impact of these will depend on the nature of the business and type of role. Other examples of indirect costs include: Fines as a result of failing to carry out mandatory pre-employment checks (e.g. CRB, eligibility to work in UK) Arranging cover while position is filled. In order to get a handle on the cost of labour turnover, you firstly need to establish a system for basic record keeping and reporting. On top of this, you can apply specific measures to cut these costs. Did you know? In 2010, the median recruitment cost of filling a vacancy was 8,333 for senior managers/directors and 2,930 for other employees 3 In the CIPD survey (see above), of the respondents who were able to supply turnover data, only 14% reported that they calculate the cost of labour turnover, while: Over three-quarters (78%) reported they didn t and the remaining 8% reported they didn t know. 4 Top 10 ways to cut recruitment costs using HR systems In light of overall budget cuts and pressures, recession-hit organisations are likely to implement short-term measures such as recruitment freezes in their quest to drive down recruitment costs. Implementing an HR system is of course a bigger project but one that can pay significant long-term dividends. So what can HR systems do to cut costs, and what are their key benefits? Here s our Top Utilise electronic job specs & workflow Traditionally, responsibility for creating job specs would fall to the line manager and/or marketing team. Managers would identify the vacancy, create a wish list and then pass to a design team for inclusion in local (or national) printed media. With the onus on the line manager to create the job spec, the process might be a lengthy one. Moreover, the lack of formal workflow may mean that the HR department only becomes aware of the costs once they ve received the purchase order! A good HR system is designed to overcome both these challenges. 2 Access E&OE.

3 A formal workflow process ensures that all recruitment requests are created electronically. These can then be forwarded to your specified approver/s for authorisation and checked against relevant budgets in just a few clicks. Instead of job specs created from information held in peoples heads, a central system provides a database of electronic forms for managers to view online. Similar or repeat positions can be quickly created, and templates easily tailored for new positions. This information can then be quickly uploaded to the relevant job board, agency or website. The combined workflow and sign-off process creates visibility across the organisation, decreases ownership among individual departments and/or managers and ensures consistency across your brand. Of course, the idea of a central, electronic storage for job descriptions may not be new to you. One of the many advantages of an HR system is that it also provides a workflow for uploading these job specs to your website see point 2 for more. Quickly create job specs for repeat and similar positions Create consistency across your company brand Reduce burden on line managers and marketing team Implement job creation and sign off procedures Reduce risk of people owning old/out-dated vacancy information. 2. Make your company s website work harder for you The explosion of web-based technology has seen many businesses make the move from printed publications to lower-cost media, with 49%of organisations turning to the use of new media/technology to recruit. 5 The appeal is obvious: the costs are low, with the potential to reach out to a wide audience in just a few clicks. Advertising jobs on your company intranet also has the advantage of helping increase the number of internal referrals. In fact, the CIPD survey showed that advertising via the corporate website came out top overall in the most effective methods for attracting applications (63%) beating recruitment agencies (60%). 6 Of course, many of you will already be advertising positions on your website. The advantage of using an HR system is that you can also create a secure online environment whereby applicants can upload CVs and other documentation. By cutting out paper and streamlining the flow of electronic documents into your business, you make it not only simpler and more convenient for the applicant (who can now apply online 24/7) but reduce paper processing within your organisation. Plus the information is put onto the system by the applicant themselves not HR saving a huge amount of time. Attract a wider pool of applicants Create, edit and publicise positions in a few clicks Make applications simpler and more cost-effective to administer Applicants enter their own data not HR. 3. Implement pre-screening In the past, the only way to decide who had the relevant qualifications and/or experience was to sift through hard copy CVs in many cases, not just once, but twice firstly from the view of the recruiting team and again by the line manager. HR systems make the sifting process much simpler by ensuring that candidates meet specific criteria before submitting their application. These are then forwarded directly to your inbox, allowing you to review CVs at your own convenience far more efficient than waiting for the morning mail round! Speed up the time taken to process applications Quickly prioritise relevant candidates Lift the burden on line managers Review applications at your convenience. 4. Provide online access for agencies The use of recruitment agencies is a fact of life for many businesses. Their ability to draw on a wide database of potential applicants can prove invaluable, not only in supplying temporary staff and agency workers, but helping businesses fill niche or specialist positions. Of course, agency services come at a cost and we all want better value for money. And HR systems can play a significant part in driving costs down. At present, you may receive CVs from agencies, sift through them to get the information you need and then start the process of arranging interviews. Each time you need to re-use the candidates details, the information is re-keyed. Unsuccessful or unsolicited applications are either deleted or stored away, with their contents buried inside a folder or inbox. HR systems have the huge advantage of making this information easy to store, update and search. For successful applicants, this keeps duplication to a minimum. As applications progress, you simply have to add relevant details as you go (as opposed to re-keying the information each time). For unsuccessful and/or unsolicited applications, the HR system provides a rich store of information which can be searched and refined by criteria of your choice (such as specialism, location, salary expectations) saving you more time and money when looking to fill future positions. HR systems also go a step further in making the process more efficient and cost-effective for you. By providing agency staff with online access to your system, they re able to enter candidates information directly into the database. This way, work is completed by the agency, not your HR team Access E&OE. 3

4 significantly reducing re-keying and improving value for money. Multiple agencies can log into the system at once, each with their own secure area. The only person who sees all the candidates details is you. In an increasingly competitive market where employers are either introducing or improving their preferred supplier lists, an agency s willingness to play a more proactive role may prove a key differentiator. Get better value from agencies Reduce duplication of effort Screen candidates for future roles Easily store and search unsolicited applications. 5. Utilise automated messaging Most of us would agree that while it s important to keep candidates up to date with their application, the sheer volume received can make it impractical to reply to each person especially during the early stages of the process. In fact, a recent report found that nearly a fifth of employers admit to not having the time to let candidates know when their application has been received. 7 Yet not providing information can be counter-productive for example, you may be faced with a deluge of telephone and enquiries from anxious candidates, keen to know whether their application has been received safely, whether their interview has been successful and so on. Using automation, messages such as receipt of application and we regret s can be sent within a few clicks. HR systems therefore make it easy to keep many applicants in the loop at all times, keeping HR costs down and strengthening your company brand in a fraction of the time. Keep applicants in the loop Decrease inbound calls and s Be seen as a responsible employer. 6. Create bulk correspondence In many instances, you may need to create and send documentation to candidates when arranging interviews, providing task material, final offer letters/contracts and so on. All this can involve significant work as many documents have to be updated manually and the details re-keyed several times. With an HR system, the process of creating, updating and deploying bulk correspondence is simple. Templates created in Microsoft Word are linked to your database and merged. Using , you can then deploy any number of documents to the candidate in just a few clicks. Because all of the applicants details are already held in the system, all you have to do is update a few key details (e.g. interview date, time and location) and the software does the rest. Sending documents electronically speeds up the process, makes it more secure, reduces duplication and the likelihood of documents going missing in the post. Create and send correspondence in a few clicks Deploy documentation securely Keep track of all documents sent Reduce data duplication, improve accuracy. 7. Carry out pre-employment checks automatically For recruitment, increased legislation represents a hidden cost. Failure to carry out pre-employment checks, such as eligibility to work in the UK or CRB can expose your business to fines and lawsuits, not to mention damage to your reputation. An HR system makes the process of carrying out these checks easy to manage, ensuring nothing slips through the net. Using pre-screening, the question of are you eligible to work in the UK can instantly exclude unsuitable candidates, and where checks need to be carried out, documents, such as passports, can be quickly scanned and stored against the employees record. triggers can be set for specific dates, providing early warning of expiry dates/renewals, and reports run at any time to help you quickly review (and chase up) any pending or outstanding issues. Ensure all key checks are carried out Reduce admin and save time Receive early warning of potential issues Reporting on demand. 8. Streamline starter on-boarding Retaining employees is just as important as recruiting them and ensuring a smooth transition for new starters can significantly reduce your labour turnover. An HR system facilitates the on boarding of new starters by ensuring that the process is streamlined and efficient. One such area is setting up new starters in payroll. Traditionally, the applicant s details are entered firstly into one system (such as a spreadsheet) and then into the payroll itself. The process of re-keying not only takes time, but exposes the data to potential errors, in bank or salary information for example. By choosing an integrated HR and payroll system, the need to duplicate information is eliminated. Moreover, much of the employee s information will already exist electronically, leaving you to add just a few details. For security, information originated on the HR side is sent into a holding pen for the payroll operator to approve. On validating the information, the system is updated in a single click, keeping the business in sync at all times essential for reporting and keeping decision-makers up to date. Eliminate data duplication within payroll team Save time and decrease errors Gain a real-time view across your business Keep decision makers up to date. 4 Access E&OE.

5 9. Reporting on demand Having one place to record all your recruitment activity is essential. But getting accurate information out is just as important. The ability to produce reports quickly not only lifts the admin burden on you, but enables you and your decision-makers to gain an accurate picture of your recruitment spend and set measures in place to improve performance. So if you are struggling with multiple spreadsheets and carrying out manual updates, then consider a good HR system. A comprehensive selection of board reports will enable you to present KPIs such as cost per hire, time per hire, and number of applicants per vacancy, at the touch of a button. What s more, good software vendors will also provide in-built dashboards, enabling you to view this information in graphical formats such as graphs and charts. This form of presentation provides you with a desktop-view of your changing situation, allowing you to monitor your recruitment activity at-a-glance. To give you the widest possible view of your recruitment spend, the software provider should be able to configure reports for you, and be able to draw information from other areas of the business if required. These can also be scheduled to run on a set timeframe (monthly or weekly, for example) and ed out automatically. Eliminate the use of spreadsheets Reports at the touch of a button All information in one place Give managers ability to run their own reports Get a real-time view of KPIs. 10. Utilise self-service Self-service can play a significant role in reducing costs. It works by providing staff and managers with access to data held within the HR system, usually via a web portal such as your intranet. By enabling staff to update information (such as address and bank details) and also to submit requests (such as absence), the admin burden is lifted from HR and dispersed to the wider business and data accuracy is vastly improved. For recruitment, self-service allows HR and recruitment managers to play an active role in all stages of the process. For example, they can put in an application for a new role, review all the applications/cvs that are going through the system and approve new starter information. All stages are subject to process flows, meaning data submitted into self-service enters an approval chain and is subject to your chosen checks and approvals. Ensure all hires follow specific signoff procedure (e.g. are checked against budget) Lift admin burden on HR Provide managers with visibility of applications Secure, online access for staff. In summary... This guide has shown that establishing recruitment costs goes beyond calculating basic measures such as agency and advertising fees. By looking at examples of both direct and indirect costs, we have demonstrated the importance of keeping accurate and timely records for every stage of the recruitment process and the role HR systems have to play in achieving this. From here, we demonstrated how, by implementing ten key measures such as workflow, automation and online technologies, you can reduce administration both within HR and across your organisation as a whole all of which can play a significant role in driving costs down. Functionality checklist There are a number of key types of functionality that you should be looking for when evaluating HR systems. Choosing a solution with the following will help you maximise the benefits listed above: e-recruitment ability for applicants to apply online Online access for agencies Track and manage applicants Automated alerts and responses Bulk updates and mail merging HR and recruiting manager access through self-service Process workflows including hire and on boarding Integration with payroll. About Access Select We are dedicated to the development and support of people-based software systems. With 20 years' experience in the human resource software market, we have a clear understanding of how to help you implement our systems to gain maximum benefit. Our software We provide two fully integrated software packages, SelectHR and SelectPay. Both are modular, giving you the freedom to add functionality as your needs change, and scalable to meet your future growth. Whether you are looking for standalone HR, integrated HR and payroll, self-service or online recruitment, we have the solution for you. Get in touch For more information about our recruitment solutions, or any other area of the Access Select portfolio, visit our website To discuss your HR & payroll needs, call or david.richardson@theaccessgroup.com References 1 CIPD Annual Survey Report 2010: Resourcing and talent planning, p2 2 CIPD Annual Survey Report 2010: Resourcing and talent planning, p3 3 CIPD Annual Survey Report 2010: Resourcing and talent planning, p3 4 CIPD Annual Survey Report 2010: Resourcing and talent planning, p28 5 CIPD Annual Survey Report 2010: Resourcing and talent planning, p15 6 CIPD Annual Survey Report 2010: Resourcing and talent planning, p9 7 British Chamber of Commerce: Access E&OE. 5