Why Commercial Companies Avoid Using Recruitment Agencies for Employee Hiring – Cost Considerations
Recruitment agencies play a significant role in connecting job seekers with employers, providing a range of services, including candidate sourcing, screening, and selection. However, in our recent survey of Australian agribusinesses we were surprised to see that only about 20% of agribusinesses used a recruitment company to find potential candidates. This analysis aims to explore…
Recruitment agencies play a significant role in connecting job seekers with employers, providing a range of services, including candidate sourcing, screening, and selection. However, in our recent survey of Australian agribusinesses we were surprised to see that only about 20% of agribusinesses used a recruitment company to find potential candidates. This analysis aims to explore the reasons behind this tendency and shed light on the factors that influence commercial companies’ decisions to bypass recruitment agencies for employee recruitment. Let’s start with the first and most common reason, Cost Considerations.
Cash-strapped businesses often hesitate to start hiring, even when they need workers, due to the actual cost of hiring employees. By conducting the recruitment process in-house, companies can save on these fees and allocate resources elsewhere, such as employee training or internal development programs. In our experience many companies who undertake their own recruitment process take a significant amount of time, often without success, for the recruitment process. We have found that simple online advertising rarely nets many relevant candidates. Let’s look in more detail at the cost implications of this situation:
Company ABC urgently needs to fill a senior management position due to a sudden departure. The position is critical, and any delay in filling it could have a substantial impact on the company’s operations and bottom line.
Cost Comparison:
Internal Recruitment Cost: $68,200 – $135,700.
External Recruitment Cost: $18,750.
In this example, the external recruitment agency not only potentially saved the company $49,450 to $116,950 in direct costs but also helped fill the crucial position faster, reducing the potential negative impact of a prolonged vacancy. Additionally, the company’s internal HR and management staff could focus on their primary responsibilities rather than dedicating a significant amount of time to the recruitment process.
While the cost savings are evident, it’s essential to consider the unique circumstances of each hiring situation, as well as the quality of the candidates recruited. In some cases, the urgency of the hire and the need for specialized expertise may outweigh the cost savings of internal recruitment.
Contact us if you would like to find out more about the services an external recruitment agency provides.
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