Finding the right employee can feel like trying to find a needle in the haystack. It is difficult to determine if an applicant will be right for the job. If you do wish to make accurate recruitment, you will have to invest in a heap of resources to build a credible recruitment team, train the new recruits, and more. It is no wonder why so many head executives are left wondering if there is a better alternative.
The good news is that there is an even better alternative to traditional recruitment: using labour recruitment agencies. Not only will you save on time and free up opportunities for your staff to tend to more important matters, but you will also save money. How much exactly?
To understand how working with a labour hire agency can really help you out financially, we are going to examine the costs of hiring an employee through traditional recruiting means first. So, take notes on the numbers. They might surprise you.
The Cost of Hiring an Employee
In Australia alone, hiring a single employee costs about $40,000 on average. Depending on how exhausting the hiring process is, you can be looking at numbers way higher than that. These are the following factors that contribute most to that amount:
Recruitment
Hiring an employee can cost a lot. From advertising to premium recruitment platform subscription, the expenses needed to hire just one employee can easily add up. In addition, the time that the HR staff spends on discussing openings, screening, interviewing, calling back, and background checking can rack up the bills in an instant.
The recruitment process involves too many stages. But what’s unfortunate is that you are forced to spend time in each stage without the absolute guarantee that the applicant will make it to the onboarding stage or not. Each applicant you screen and interview is a gamble on time and other resources.
Training
When applicants do get hired, you still have to spend time on training. The time you spend training them on how your production floor works could have been spent on something more productive. Not only do you have to train them on how your company works, but you also have to send them to specialised labour training programs to ensure that their skills are at par with your company standards. Otherwise, you’ll run the risk of having someone who doesn’t know how to efficiently meet your expectations.
Productivity
Lost productivity is an inevitable consequence of having other employees train and orient the new ones in their roles. They would not be able to concentrate on their usual tasks as much. Thus, creating gaps in their productivity rates.
Other Factors
Another factor that makes in-house recruiting too expensive is in frequency. If you only have to hire new workers once or twice a year, getting a dedicated recruitment team might not be a good idea. On the other hand, if you do need to hire many times a year, you might have a hard time keeping up with the applications. This is especially true if your recruitment team is not a big one.
The Cost of Hiring an Employee Through an Agency
Compared to in-house recruitment, using labour recruitment agencies will require you to spend much less time and money on every applicant. On many occasions, all you have to do as the client company is to screen the candidates that they have already pre-screened and selected for the open positions that you are offering.
Perhaps the cherry on top is that labour recruitment agencies offer a guarantee period. If the hire turns out to be a bad one or if they simply do not mix well with your work culture, the agency will start the search again. In most cases, you might not even be required to pay.
Different agencies will implement different payment and warranty structures. But in general, you can expect one of the following:
Retained
For high-level positions that are hard to fill, you can pay upfront and give exclusive rights for the agency to fill the spot. Good agencies will go through rigorous screening, interviewing, and background checking on your behalf. And for those services, you will have to pay about 10% of the position’s annual wage to get the recruitment going. After the hire, there will be another 10-15% fee.
The guarantee period for this payment structure usually runs for about six months to a year.
Contingency
With this type of payment arrangement, the agency will only get the fee after the new hire’s performance satisfies the clients within the guarantee period. The fee for this kind of arrangement runs for about 15-25% of the annual salary. The guarantee period, on the other hand, runs for about 60 days.
Temp to Permanent
The great thing with construction recruitment agencies is that you can absorb temp workers and make them your regular employees. The sooner you do so, the higher the fee you might have to pay. But it does get you the security of having a reliable permanent worker. The fee for this type of deal runs from 20-50% of the position’s hourly wage. The guarantee period is typically pegged at 90-120 days.
Other Financial Perks
Another benefit of working with recruitment agencies is that it helps in expanding your network. By working with an agency, you do not only get highly qualified candidates for the job but your company will also be advertised by the agency for free. More applicants will be interested in working for your project or firm. This will make the succeeding recruitment process much easier.
Want more information on labour recruitment agencies? Check out Labor Solutions blog articles. We have topics covering everything you have to know about working with and for labour recruitment agency.
Need a Hand in Professional Labour Hire?
We hope you gained some insights on the financial benefits of working with labour recruitment agencies through this article. If you wish to fill the gaps in your workforce, you can trust Labor Solutions to provide suitable candidates for you. Contact us today!