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Small Business Owners and the Real Cost of Hiring

Recently I have been speaking with a lot of small business owners, actively looking or about to embark on a search for a new employee to fill a hole left by a previous co-worker, or they are expanding the company and have created a shiny new position. A fair amount of the time the conversations have had a re-occurring theme; “We don’t have the budget to take on a recruiting agency for our search“. A fair answer, however it always leads me to ask this question; At what point does it become an opportunity cost to overlook agencies?

Some small businesses may be getting a good response in the amount of resumes from a job posting, some may have a network they can reach out to, some may even have someone in the organization that has had previous experience screening, interviewing and checking references. Realistically the majority lack these three basic areas. What if the budget they lack is actually currently being eaten away?

Time Cost

The majority of smaller companies cannot afford to have one or two senior employees taking time away from their work to read and review resumes, contact and schedule potential candidates, not to mention have a one or two stages of interviews with the best of the bunch. The lack of a dedicated department means they are asking their staff to take on two roles and be overly efficient in both. How much time away from their actual work can they afford to lose?

Talent Cost

Are small businesses able to find the best possible fit when they are only dealing with resumes received in response to job postings? The reality is smaller companies are hoping that the job description is well made, that a fair amount of candidates come across the position, and candidates are at the point of looking for work while the company is advertising. What about candidates out there that are not actively searching, that have not seen company job posting, or that do not even know they could be missing out on a perfect fit? Many talented candidates are out there, a small percentage send in a resume.

Financial Cost

Larger organisations can hire someone, realise they are not a fit and replace them in the blink of an eye. It doesn’t rock the boat in any way and they can afford to take that risk. Can smaller companies? Usually after they have been trained, met everyone and got a couple of months under their belt is when the cracks start to appear and it becomes apparent that it isn’t a match made in heaven as first thought. Two months salary and other staff taking the time to train someone who is just not right, is not something the majority of smaller businesses can afford. Now this doesn’t happen always, but the risk of this becoming a possibility is always there. Coupled with the loss of work from looking over those resumes, calling candidates and scheduling interviews, there is a larger cost than simply hiring a recruiting agency to help.

Recruiting Cost

Hiring an outside agency to help aid a search does cost money, but it also solves many problems. The time saved by gaining a team of trained recruiters with expansive networks in dedicated areas is great in comparison. Recruiters can find not only candidates actively seeking new work, but more importantly talk with individuals who are not ‘job-hunting’, who have the right skills but have not been sending off resumes to companies. Recruiters screen, meet with and reference check on candidates. Recruiters offer guarantees on candidates usually for three months after their start date. Best of all, recruiters don’t charge a penny until they have placed someone within your company.

Small companies look to save money by recruiting themselves. It makes sense to most. On closer inspection though, it could cost them far more.



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