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Cutting recruitment costs, whilst improving hiring outcomes

Battling Recruitment Challenges

Businesses in the UK typically experience an annual employee turnover rate of around 15%. This implies that for a company with a workforce of 1,000 employees, approximately 150 new hires are required each year just to maintain staffing levels. When growth is factored in, the hiring needs surpass 15% of the workforce. This makes recruitment a critical function. After all, businesses know that not filling a position eats into productivity and profit.

To manage this turnover, companies employ various hiring strategies. Many rely on their Human Resources (HR) departments, which often include a talent acquisition function. While HR and talent acquisition teams play a pivotal role, they often face significant workload pressures. This leads to constraints on their capacity to fill all necessary roles. Moreover, HR teams typically lack the time to proactively reach out to passive talent. They often rely on responses to advertisements rather than actively sourcing candidates, therefore missing huge swathes of the market. In addition, internal teams may not always possess the in-depth understanding of the talent landscape needed to effectively identify and attract the right candidates for niche roles. Consequently, businesses frequently allocate budgets to external recruitment agencies. This bridges the gap on knowledge, candidate accessibility and resource limitations.

Recruitment agencies typically operate on a success-based fee structure and charge 15-25% of the hired candidate’s annual salary. This means that companies can quickly face significant expenses, especially when hiring at high volumes. To mitigate this, businesses are increasingly focusing on cutting recruitment costs.

Cutting Recruitment Costs: The Embedded Hiring Solution

Many organizations believe they have negotiated the best rates with recruitment agencies. However, there are alternative methods of cutting recruitment costs available, such as embedded hiring, or recruitment process outsourcing (RPO).

A notable proportion of the top FTSE 500 companies utilise RPO to streamline their hiring processes. This allows them to focus on core business activities while an external partner manages recruitment. However, a new breed of RPO has been emerging in the market, and has been utilised very effectively in recent times. The ‘Embedded Recruitment’ solution offers a scalable ‘recruitment as a service’ option for businesses with 25 to 2,000 employees. Unlike traditional recruitment agencies, embedded hiring solutions align closely with the company’s goals, mission, vision and values. This ensures candidates fit culturally, budgetarily and from a skills perspective. And because you are paying for time, rather than on success, Embedded Recruitment provides superior value for money.

For example, engaging a recruitment agency to hire a Financial Director might incur a 15-25% fee of the candidate’s salary. In contrast, an embedded solution typically reduces costs by 40%. This is a significant saving for companies with extensive hiring needs.

Furthermore, companies requiring rapid scaling can benefit from an embedded recruitment team. An embedded recruitment team integrates with the existing talent function to enhance collaboration and efficiency. From a branding perspective, an embedded solution ensures consistent communication and preserves brand integrity. This is opposed to multiple agencies that might misrepresent the brand in the talent market.

In essence, an embedded hiring solution offers a tailored, efficient process which can be ‘dialled up, or dialled down’ as the needs of the business flex and change. And because the solution is aligned to the same goals as the client that they are engaged with, the outcomes are much better. Businesses find higher-quality hires and improved retention rates.

Businesses often perceive their options as limited to internal recruitment or external agencies. However, an embedded solution combines the benefits of an internal team with the flexibility, talent pools and expertise of external agencies. This approach has proven advantageous, as evidenced by its implementation at the UK’s fastest growing Buy Now, Pay Later scale up. In this instance, an embedded team facilitated significant growth, scaling the workforce from 100 to 250 employees in nine months. This saved the business more than £180k in agency fees.

Whether a company has an established talent function or relies heavily on agencies, an embedded solution can offer substantial cost savings and improved hiring outcomes. Unlike fixed-term contract talent partners, embedded solutions come with a structured management framework, service level agreements, and key performance indicators to ensure optimal performance.

ERA Group: Your Partner in Recruitment Efficiency

ERA Group procures embedded hiring and RPO solutions. However, we also leverage our expertise to negotiate with existing recruitment agency partners to reduce costs. We optimise agency relationships and secure favourable terms. This ensures that our clients receive the best possible value from their recruitment spend.

At ERA Group, the focus is on delivering the right fit for each organization. For larger companies, a traditional RPO provider might be suitable. However, for smaller businesses, embedded solutions offer an ideal alternative.

By partnering with ERA Group, businesses can achieve efficient and cost-effective recruitment strategies, tailored to their unique needs.

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