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Recruitment and ensuring this is carried out correctly is a vital necessity when recruiting people as recruitment of the wrong person can lead to performance issues, grievances, increased costs, and lowering of morale in the existing workforce. Such people are likely to be disengaged, unlikely to give off their best, and end up leaving voluntarily or involuntarily when their unsuitability becomes evident. 


The True Cost of Recruitment.  

People often believe that the cost of recruiting is purely the cost for advertising or using a recruitment agency. They rarely consider the other common costs such as management time or loss in production.

Unfortunately most companies underestimate the cost of recruitment by 90-95%. This can often lead to terrible decisions that can increase costs, even when the original intention was to reduce them.

What are the costs involved with recruitment?


Main Costs:

  • External expenditure such as recruitment agency costs. These can 15%-30% of salary involved – higher using an executive search company.
  • Advertising
  • Subscriptions to social media and database aggregators
  • Attendance at recruitment shows
  • In-house recruiters

Many companies seek to reduce their headline costs by taking recruitment in-house, hoping to avoid agency costs. They often deliver 8-15% costs compared to salaries – less of a saving than intended. Over 70% of in-house solutions fail to source all – this can reach 90% placement failure. This subsequently leads to working with agencies, driving the average cost up to 12-20%.

Therapy sessions start for long-term sick | Consensus HR – Herts

Cost of Recruitment

Assumes £40,000 average salary

Agency led solution (22% average) £8,800 per head
In-house solution (12% average) £4,800 per head

When is the right time to hire?

Many companies record how long it takes to recruit new members to the team, but fail to recognise it as a cost. Actually this is a huge business overhead.

The average hiring time is 10-12 weeks (from job opening to an accepted offer), during which time the role is unfilled. For that period there is either no productivity, or it is provided by diverting someone else, (if possible).

All these options have a tangible cost, plus if the hiring timeline slips the cost goes up. In-house recruitment teams take longer to hire with an average 12-16 weeks. This is due to a lack of extensive databases and wider industry contacts. This has a significant impact on the cost involved.

How can hire costs be reduced?

  1. Proactive recruitment planning

Move away from the purely reactive model and understanding your recruitment demand. This can reduce the typical hiring times by 4-6 weeks. For the best results, operate a Talent Warehouse. By pro-actively sourcing and managing candidates before they are needed, hiring times can be cut by to 3-4 weeks.

“This approach offers a huge saving,” says Matthew from Consensus HR. “We actively encourage our clients to maintain a database of applicants – people who have been recruited and interviewed previously, but not offered a role at that time. These applicants should be told that that their details will be maintained on a database and contacted immediately should a suitable vacancy arise.”

2. Effective management involvement

Management time within the recruitment process is a major cost. This typically involves:

  • Specifying roles
  • Reviewing CVs
  • Interviewing
  • Repeating the process as over 50% of offers made are rejected

This cost is the same whether candidates are sourced by agency or in-house. A Talent Warehousing approach is the only cost-cutting option, reducing management time invested in recruiting by an average of 70%.  Consensus HR offers effective recruitment support by:

  • Writing a detailed job description and advertisement for the role
  • Reviewing CVs received
  • Producing a detailed recruitment process and selection criteria
  • Attending interviews as required

These activities significantly reduce the management costs involved within the hiring process.

How could you reduce the recruitment costs in your business? How could you introduce Talent Warehousing?

mployers must be aware of the hard facts of recruitment and actual numbers involved with recruiting new people and looks at options that can significantly reduce those costs.

What is the average cost of turnover assuming a salary of £40,000 average salary and average hiring costs of 12% per head, 20% attrition in first 12 months?

The cost of repeat hire: £960, Cost of productivity loss (11 weeks) £5,617 and management time £1,456.

Total cost of turnover per head using an agency of in-house averages £8.033 and using an in-house talent pool or ‘recommend a friend’ scheme, £955.

The real cost of recruitment is not just how much you pay for your recruiters, agency fees and adverts (see our earlier blog and the true cost involved).

A fairly typical £40,000 hire can cost well over twice that in combined headline and hidden costs, even based on average figures. Whether you use agencies, in-house recruiters or an RPO provider the bottom line is the same; hiring costs are approximately double the salary involved.

Only by using proactive sourcing and Talent Warehousing can employers drive down:

  • Time to hire
  • Management resources demanded
  • Attrition whilst bolstering productivity

Now, businesses can address the fundamental issue of recruitment costs.

Matthew from Consensus HR explains: “We are often heavily involved with the recruitment process, which often drives down the actual recruitment costs and timescales involved. We advise that the company retains all suitable applicants’ CVs. Our detailed recruitment process, including interview questions & selection criteria, is provided for future use. These steps ensure a reduction in costs.”

Matthew adds “The logistical cost of replacing an employee will probably come as not surprise to businesses.  The financial impact of training replacement workers is a real cost which is often missed. Productivity will be affected whilst the necessary experience is gained. This is also a cost that most businesses have not considered before.”

Costs for recruiting new talent can be startling.

Consensus HR encourages businesses to place more emphasis on:

  • Retaining talent in the workplace
  • Continually performance managing the team
  • Developing employees in the skills required for their role
  • Actively encouraging team members to progress within the business and their roles

Good members of the team stay with employers who demonstrate that they value and care for their employees. Companies should operate – or ‘live’ – their values, which should be documented within their policies and procedures.

Financial reward is not always the answer.

To keep the perfect match for company roles, employers need to look at the overall benefits package offered such as pensions, gym membership and additional holidays.

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