Are your recruiting costs too high? Insource it and save. Here’s how…

I was speaking recently with a recruiting executive for a Fortune 200 company. She was struggling with the costs of domestic recruiting, poor results, and managers who didn’t interview well. The head of HR, her boss, wanted to cut hiring costs further and told her to take their recruiting contracts out for another competitive bid.

I suggested she was in a downward spiral and should instead insource recruiting. She just stared at me. “We outsourced recruiting five years ago. This is our sourcing model,” she said. I countered: “How is it working for you?” I have always found that well managed internal recruiting processes are more effective than outsourced recruiting. If you insource recruiting, you can better promote your brand, control your processes, screen better, hire candidates faster, reduce turnover, and cut the costs per hire.

My experience is not alone. According to a study by Korn Ferry, about 40 percent of US companies have outsourced recruiting to a recruiting process organization (RPO) and are frequently unhappy with the results. Korn Ferry discovered that many of these companies do not effectively track their recruiting performance metrics. With poor metrics, only 35 percent of those companies were satisfied with the recruiting performance of their RPOs.

Recruiting, especially when it is high volume or for fast growing companies, must be viewed as a highly reliable, repeatable process, like a smooth-running manufacturing line. When it is, internal recruiting processes will find the talent you need, reduce costs per hire, and drive down costly turnover. This requires a compelling employer brand, lean processes, the use of validated assessments, digital technology, process metrics, managers who are trained to interview well, and a commitment to a talent-management mindset.

The good news is that digital technology is revolutionizing recruiting. Today’s recruiting, like marketing, can use the latest chatbots, machine learning, and artificial intelligence technologies to make the whole process of hiring as effective and efficient as possible and improve the job candidate experience.

Blockchain technologies are not far behind. They will revolutionize how HR will validate the academic degrees, credentials, and work histories of job applicants in seconds, not days or weeks, as required of today’s background check systems.

I have repeatedly insourced and leaned out recruiting in my career. It has always led to the faster hiring of better-qualified candidates and lower costs per hire, reduced employee turnover, and a return on investment.

Here is how to get started:

  1. Collect data. Outdo the finance department in collecting the cost of your current outsourced recruiting model from every department’s budget. The cost total will amaze you. Collect other metrics on performance throughout your current process. These metrics should include the time to hire, the response time of managers to review screened resumes, your best recruiting sources including employee referrals, turnover and its cost to the company, and what you are paying every vendor involved in search. Many companies discover in the data collection phase that employee referrals are the No. 1 or No. 2 recruiting source. A recent Jobvite study found that 40% of company hires are from employee referrals. This begs the questions: if your employees are providing referrals, why outsource recruiting?
  2. Lean it out. Use lean sigma tools to lean-out your recruiting process and put in place excellent process measures.
  3. Provide adequate training. Train your management team in effective interviewing.
  4. Employ assessments. Use validated assessments on where you are having a difficult time hiring quality employees. These tools can be more accurate than interviewing for selecting excellent employees.
  5. Use your employer brand. Turn to your employer brand. Does it articulate the cool work your employees do and how their work improves humanity—through the voice of your employees?
  6. Adopt digital technology. The final step is to put in place newly emerging recruiting technology that will provide you a competitive advantage. These tools include job-candidate-friendly applicant-tracking systems, chatbots, and AI platforms. These tools can search for and match job candidates to your roles and to track your measures. Chatbots can communicate instantaneously with job candidates keeping them up to date on their progress through the hiring process.

Today’s tight talent market means fierce competition. Despite the worries about recession, the demand for technical talent is not abating. Would you outsource the management of your customer brand? Your most critical customer management, R&D, or manufacturing processes? Learn to manage recruiting like your other significant enterprise processes, and your company will significantly improve its profitable growth.


Victor Assad is the CEO of Victor Assad Strategic Human Resources Consulting. Today’s blog has excerpts from his new book: Hack Recruiting: the Best of Empirical Research, Method and Process, and Digitization. You can buy it online at AmazonBarnes and Noble, and Archway Publishing

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