Seven ways to reduce recruitment costs



Read time
7 mins


Spending too much on hiring? Our seven simple tips will help you reduce your cost per hire

No new hire comes for free, unfortunately, but there are strategies you can use to reduce your unavoidable hiring costs.

Before we dive into how to reduce costs, it’s worth thinking about what you’re spending at the moment, and how you’re spending it. The cost of hiring a new team member varies significantly depending on how you calculate that cost. If you take into account the onboarding period – the time that the new hire takes to get up to full working speed – then the average cost of replacing a single employee could be as high as £30,000, according to analysis from Oxford Economics.

However, most organisations will look primarily at key areas such as recruitment agency fees, referral fees and advertising charges when calculating hiring costs. And it’s important to bear in mind that these costs will vary depending on the type of role you are recruiting for; the CIPD Resourcing and Talent Planning survey 2017 puts the median cost for hiring senior managers and directors at £6,000, while the median cost for hiring all types of employees is £2,000. Whether you choose to handle your hiring in-house, outsource it, or combine the two approaches will also affect the budget you need to put aside for recruitment.

Regardless of whom you’re hiring and the methods you’re using to find and select them, here are seven ways you can cut recruitment costs – without compromising on the quality of hire. 

1. Tap into advocacy

Think about the last time you chose a restaurant or holiday destination: you probably looked up reviews online or asked a friend or family member for advice. Jobseekers are increasingly taking the same approach – asking trusted colleagues, peers or friends for their impression of the employer, consulting their connections on social media networks such as Twitter and LinkedIn, and turning to employer review sites like Glassdoor for the inside scoop.

If you’re confident that you’re doing the right things to make your employees feel supported, happy and engaged at work, your organisation should feel comfortable encouraging staff to share their experiences of your workplace, particularly through their social media channels. Brand messages are shared 24 more times when distributed by employees than when shared by the brand itself, according to research by MSL Group – making advocacy a powerful, and inexpensive, tool that could really make a difference to your recruitment strategy. 

2. Introduce a referral scheme

Although introducing a referral scheme means you’ll need to set budget aside to give existing staff a nice ‘thank you’ bonus for successful introductions, in the long-term, it can be really cost effective. Employees will likely only refer people they know who will not only fit the role’s requirements, but will also be in tune with your organisation’s working culture and therefore likely to stay with you for longer.

Related: How to successfully hire for culture fit 

3. Take advantage of social media

The ability and willingness to communicate socially allows an employer to provide an insight into their day-to-day operations, their vision and values, and the type of people who work there. This transparency and authenticity will help to increase the volume of applications you receive from individuals who are already confident that they’ll fit your culture and share your vision and values.

Best of all, social media can be completely free – all you need to invest is a little time in putting together the right messages and campaigns, and interacting with your followers. You can also opt to pay for advertising campaigns to target specific audience groups.

When you’re just starting out, choose to focus on the most appropriate channels for your audience, rather than every possible platform. You’ll probably find that LinkedIn is the most relevant to your recruitment strategy. If you’re not sure what techniques are most effective on social media, turn to the countless blogs that cover the subject, or ask your marketing colleagues for support and advice. 

4. Use the right tools for the job

You’ve heard the old adage: ‘a poor workman always blames his tools’. Well, this saying can apply just as much to recruitment (and HR more widely) as it does to DIY.

If you don’t have the right tools at your disposal, your ability to hire cost-effectively will be hampered from the start. Invest in robust recruitment software or an applicant tracking system (ATS)  to streamline your process, reduce duplication of work and data entry, protect candidate data and better comply with the requirements of the GDPR.

You can also choose to integrate your ATS with other software that will help you hire even more effectively, such as psychometric testing and profiling tools, and background-checking apps.

Make sure that all your recruitment technology is pulling in the same direction – to make hiring as seamless, streamlined and stress-free as possible – rather than working against you. The money you invest in the right technology will soon pay off when it comes to time and efficiency savings. 

5. Create a clear, compelling job advert

For some jobseekers, the job advert that they stumble across on your website, on a job board, or on social media, will be one of the first and therefore most crucial experiences they have of your organisation.

In what is essentially a candidate’s market, your advert not only has to be well written and free of errors, it also needs to be compelling, optimised for search, and to clearly outline the job’s key requirements and responsibilities.

Make sure these requirements are genuine: don’t say ‘degree required’ if that’s not true, or you could lose out on some great applicants. Similarly, if the role could be part-time, or flexible hours, or remote working are options, say so: you’ll broaden the range of candidates who will want to apply.

These small tweaks won’t cost you any money but really could transform your ability to find the right person for your role.

Related: 11 simple steps to improve your employer brand

 6. Build talent pools and alumni networks

Sometimes, you can have lots of brilliant candidates for just a single role. So don’t waste those contacts: build talent pools of people you can approach when positions open up in the future.

Pre-qualifying applicants make the whole process much easier, quicker and more cost-efficient than sourcing from scratch. The further through the process the applicant has previously progressed, the more you already know about them. However, be sure that your continued storage and processing of these individuals’ data is in line with the requirements of the GDPR; deploying a robust ATS can help.

Similarly, employees who have left for pastures new can be a great source of future candidates. Keep in touch with your alumni and they may want to come back to a new role – or recommend a friend apply instead. 

7. Reduce the need to recruit in the first place

The final way to cut hiring costs seems simple on the surface, but might turn out to be a complex project; improving the way you support and engage with your existing employees should help to reduce turnover, so there’ll be less need to hire replacements for staff who leave.

Refining your recruitment processes will also help to improve the quality of your hire, which again should lead to higher staff retention rates and less ‘churn’.

This article was first published in July 2017. It was updated in February 2019 for freshness, clarity, and accuracy.

“Ciphr iRecruit has been a huge time saver: we previously had quite manual, antiquated recruitment processes and it’s streamlined everything. Line managers are more engaged with hiring too.”

Discover how Ciphr iRecruit has improved Bryanston School’s ability to hire: read their success story now


Further reading: 15 recruitment challenges for 2024 (and tips for overcoming them)