Written by Abby Thorp

How inefficiency leads to hefty recruitment costs.

The cost of hiring designers and developers is expensive, time consuming and stressful. Finding someone who integrates seamlessly into your team and has all of the necessary skills to do the job is near impossible.

The problem

When agencies want to scale they go straight to recruiting.

As soon as an agency wants to scale their first thought is to recruit new team members. In reality simple optimisation of workflows would empower existing teams to generate more output.

Take a look at Miles’ post “Inefficient web creation processes are killing your profit margins” to see the true cost inefficiency has on your agency.

This instinct means you go through the stress of recruiting when it may not be needed. Think about the time you spend sifting through CV’s, interviews and technical tests.

When you do find that unicorn they are inundated with other offers as well as the dreaded ‘counter offer’ which over 50% of candidates are presented with from their current employer. The average time it takes to hire someone (if all goes well) is 36 days.

Let’s not forget the costs of recruiting which have a big impact on an agency’s profitability. Every pound spent on recruitment is a pound off of your bottom line. So, how much are you actually spending on recruitment?

30% of starters plan to leave within 12 months

30% of new starters plan to leave their job within the first 12 months, and over half (58%) don’t expect to be at the same company after three years. – Yougov

Bad hires cost 2.5 times the employees salary

Staff turnover costs to a business is one that typically isn’t accounted for when totting up the total cost of hiring. When an employee leaves in the first 12 months of employment, they haven’t generated any return on your invested time when hiring, on-boarding and training.

According to the REC the cost of a bad hire is estimated to be 2.5 times the employees salary.

That seems shockingly high right? But, when you break it down to recruitment costs, wasted salary (and benefits package), compensation, on-boarding, training, upskilling and rehiring costs – it soon adds up. This doesn’t take into account the non-monetary costs such as low morale within the existing team and a dip in productivity.

Now, more than ever we are living in a candidate driven market. The digital skills gap is still a significant challenge most employers are facing. Having to constantly compete with the demand for higher wages and hiring people who don’t even tick 80% of the job specification.

With all the buzzwords that come with digital hires, it’s understandable why companies are constantly trying to hire the ‘top talent’ because they don’t want to lose the edge they have over their competitors and risk being stuck in the dark ages.

“£25,182 cost of lost productivity

Oxford Economics and Unum say it takes on average 28 weeks for a new hire to settle in and will cost an average of £25,182 for loss of productivity.

The solution

Change your first instinct from recruiting to optimising.

First and foremost, you need to look deep within your agency and identify your inefficiencies. You need to switch your first instinct from recruiting to optimising. Identify whether hiring more people is the answer or if you should be using the power of automation to get more from your existing team.

How much is inefficiency costing your agency?

Trying to understand whether you need to hire someone new or if you need to make your current workforce more efficient is difficult. With labour being the most costly expense of any business, it would make sense to understand if the latter is possible. Use our free calculator to estimate how much profit you could be losing to inefficiency.