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Rising recruitment costs new threat to UK businesses

Exploring all options

Rising recruitment costs and the pressure to reduce them could have a serious impact on the performance of UK businesses in the next 12 months. Businesses are employing individuals that are not an exact fit for the job and the time taken to secure candidates is impacting on business performance, according to research commissioned by Netengines - a staffing supply chain technology company.

Businesses are failing to reduce the cost of recruitment, with 80% of UK HR managers reporting that recruitment costs have increased over the past two years. Over half of the respondents are under pressure to reduce the cost of recruitment and many believe this is impacting on the quality of people employed and business performance. In addition, one fifth of HR managers and two thirds of procurement managers are unable to quantify how much their organisation spends on recruitment.

The research, conducted by Benchmark Research, questioned over 300 UK HR and procurement managers about their current recruitment practices and the cost implications. The research found that nearly a third of HR managers tasked with driving down costs believe this impacts on the quality of people employed. The survey identified other recruitment challenges faced by HR managers, including:

65% find it difficult to secure staff with the required technical skills and 60% find it difficult to recruit in a competitive market.

As a result, four out of five HR managers feel the amount of time taken to fill a vacancy has increased over the past two years. This is impacting on the people employed and business performance - with 71% of HR managers suggesting that vacancies have been filled with individuals that are not an ideal fit for the job, and the time taken to secure a candidate has impacted on the performance of the business to a significant extent. In spite of these difficulties, 56% of HR managers would not suggest that their current recruitment practices are inefficient.

When asked about their use of staffing suppliers for the past two years, over half of the HR managers have used the same number of staffing agencies and 21% have decreased the number of staffing agencies they work with, in a bid to reduce internal management time and reduce costs.

The research also found that the use of technology is prevalent in HR departments - with only 15% not using HR software. However, two thirds of HR managers are not using this software for temporary or permanent recruitment. Instead, many resort to manually checking resources - with 88% relying on direct contact from individuals regarding posted vacancies, 73% making regular contact with departmental managers and 68% reviewing individual appraisal and development plans.

When asked about e-procurement technologies and whether these are appropriate to the recruitment process, 42% of HR managers felt that e-procurement systems were appropriate for both temporary and permanent recruitment.

In response to the findings, Andrew Binns, chief executive officer at Netengines, said: ìIn the current economic climate, never has it been more important to drive down costs, sustain customer loyalty and boost productivity and profitability. Recruitment is key to achieving these aims. If organisations want to improve their current levels of productivity and profitability, they should explore all options to optimise their recruitment supply chain processes.î