How to lower your hiring costs with employer branding?
The different types of hiring costs and how to lower them
1. Internal cost-of-hire (ICOH)
There are a couple of different costs that can be defined as hiring costs. The first one is the internal cost-of-hire. This is all the time that goes into writing job postings, sharing it on all your (social media) channels, interviewing candidates, selecting candidates, negotiating wage (or even losing certain candidates late in the trajectory).
This is a cost that will always be necessary, but can be lowered if you get more good and motivated candidates that really want to work for your company.
Employer branding helps attracting the right new employees that actually match your company. So you don’t waste days of hard work and interviewing on candidates that don’t have the same values or wouldn’t fit your culture.
Communicating the right image for your company does 2 things for you: it attracts more people that are interested in joining and keeps away people that wouldn’t fit in.
Employer branding optimizes the ICOH (internal cost-of-hire)
2. External cost-of-hire (ECOH)
This is the money spent on advertising and recruitment agencies. It’s money that flows out of your company to hire new people. It’s for example the massive recruitment fee for recruiting a new IT specialist. It’s the high fee’s that you pay to boost your job openings on different job boards.
The ECOH is very high and direct. It’s a clear invoice from a 3rd party charging you for their hiring services. It’s clear and you can feel it directly in your wallet. Lowering these costs is very rewarding and has an instant impact on expenses. Examples of ECOH costs:
Advertising on job boards
Advertising in the newspapers
Advertising on social media
Hiring and agency to design hiring visuals
3. Cost of not hiring (CONH)
This is a hidden but a very important cost. It’s the cost of not having enough employees to manage all the work. The cost of increased work stress and lost sales opportunities. The cost of not being able to grow and scale your company and employees.
This cost, although it’s mostly hidden and rarely quantified, is the most painful for a business. It’s not being able to close that 100K deal because you don’t have enough construction employees to manage it. It’s not being able to do those 10 extra client visits because you don’t have enough salespeople. It’s not being able to attract those extra leads because you can’t find a good marketing employee to join your team.
The CONH is so important to tackle because it puts all other costs in perspective. Investing 5K in employer branding to get the 3 extra employees so you kan do the 100K deals is a great investment. It’s a very smart business decision. So mapping your costs of not hiring or attracting the right talent is the key to defining your employer branding budget and strategy.
How does employer branding lower your 3 hiring costs?
You can lower your ICOH, ECOH and CONH with a smart employer branding strategy going from the inside out. This means building a great company culture (or you already have one) and transforming your happy employees into true ambassadors.
This is the only long term strategy that works in employer branding (it works better than any temporary advertising campaign).
A long term employer branding strategy starts with your people spreading the company vision and values. And this way attracting new potential candidates. If done correctly you can almost eliminate (but at least lower) all hiring expenses!
Want to discover how to attract new employees with ambassador marketing?