Many employers have teams of recruiters to fulfill their hiring needs. However, partnering with a staffing agency is more cost-effective than hiring in-house.
Understanding direct and indirect hiring costs demonstrates why working with a staffing agency costs less than in-house hiring. Knowing the cost benefits lets employers better allocate their resources and improve their hiring strategies.
Understanding Hiring Costs
The direct costs of hiring include:
- Salaries and benefits: Hiring in-house involves recruiter salaries, benefits, and bonuses. Conversely, a staffing agency typically charges fees based on service levels and placement types, such as temporary, temporary-to-hire, or direct-hire.
- Tools and technologies: The costs relevant to an applicant tracking system (ATS), recruitment software, and related tools and technologies quickly add up.
- Advertising: In-house hiring and a staffing agency incur costs for posting job openings.
- Interviews: Costs for conducting interviews increase with each round.
- Background checks and assessments: Conducting background checks, drug tests, and skill tests increases hiring costs.
The indirect costs of hiring include:
- Time investment: The time spent on hiring in-house could be better invested in other essential activities.
- Onboarding and training costs: The resources required to integrate new hires into the organization increase with turnover.
- Turnover costs: High turnover rates reduce productivity and increase hiring costs.
Cost-Effectiveness of Partnering with a Staffing Agency
The following benefits make partnering with a staffing agency more cost-effective than hiring in-house:
- Scalability: Quickly scaling a workforce to manage changing business needs saves time and money on hiring. Adding temporary workers during peak periods, for short-term projects, or to cover employee leave without long-term commitments reduces hiring and layoffs.
- Candidate pool: A staffing agency’s vast candidate pool includes passive talent that remains with employers long-term, helping find the right placement and lowering hiring costs.
- Specialized skills: An industry-focused staffing agency provides access to candidates with niche skills. The agency can place candidates in hard-to-fill roles faster than an in-house hiring team, reducing hiring costs.
- Candidate quality: Thorough screening and assessment processes ensure proper placements and longevity.
- Advertising costs: Established relationships with advertising platforms provide a staffing agency with discounted rates and complimentary access to exclusive job boards. Reaching more candidates builds the talent pool and lowers advertising costs.
- Time-to-hire: A staffing agency uses its extensive network of prescreened candidates to fill jobs faster than hiring in-house. Minimizing time-to-hire lowers the costs of job vacancies.
- Risk of bad hires: Rigorous screening processes, proven track records, and no-cost candidate replacements minimize the costs of a bad hire.
- Overhead costs: Outsourcing to a staffing agency requires less office space and technology than hiring in-house.
- Administrative efficiency: A staffing agency handles most hiring-based administrative tasks, letting employers focus on core business operations.
Partner with Cardinal Staffing Services
Cardinal Staffing Services can streamline hiring, reduce costs, and improve workforce quality. Contact us to start the process today.