Companies are often reluctant to hire outside recruiting help when they have in-house HR resources or dedicated in-house recruiting teams, especially when a company is in a growth stage and cash is tight.
But if your company is trying to quickly scale up your revenue-producing talent, the many rewards of hiring outside recruiting firms make the decision a no-brainer.
The truth is, there are a lot of costs involved with not hiring the right people at the right time. Instead of focusing on the cost of hiring a recruiting firm, give some thought to what it’s costing your company to not have the right employees on board.
Time is money, and every month that goes by without hiring the right talent is costing your company in ways that you might not expect.
3 Reasons Using A Recruiting Firm Pays For Itself
Here are a few specific examples of why it doesn’t actually cost you money to hire a recruiting firm – it pays for itself, and then some:
1. Good Hires Make Money. Every employee at your company needs to deliver a return on the investment in hiring them, and this is especially evident with revenue-producing positions like sales and marketing.
When your company has reached the point where you know you need to hire in order to capitalize on growth opportunities, it’s worth your effort and investment to get as many of the right people on board as quickly as possible.
By not hiring, you effectively are missing out on opportunities – there is an opportunity cost to leaving those positions vacant for every additional month that they could have been filled with people working and making revenue for the company.
2. Recruiting Firms Help Hire More Efficiently. Why do people hire recruiting firms? There are lots of reasons – recruiting firms often have access to a better network or a proprietary database of candidates than the company can access via in-house resources alone.
Recruiting firms often bring a consultative approach where they create a comprehensive hiring strategy and offer additional bandwidth to help companies scale up their staff in periods of high growth; and recruiting firms often excel at finding talent for specific niches and high-value positions where it’s of mission-critical importance to hire the right people for the right jobs.
Simply put: recruiting firms can help your company hire the right people faster and more efficiently than you probably could handle on your own.
When you need an “all hands on deck” approach to a big hiring challenge, recruiting firms offer extra hands (and extra brainpower) to create solutions.
3. The Benefits of Hiring a Recruiting Firm Are Much Greater Than the Costs. Just like any other business expenditure, if you’re considering hiring a recruiting firm, you want to know that you’re getting a positive return on investment.
A sample ROI calculation illustrates some of the key principles of why it’s worth hiring a recruiting firm, especially for revenue-producing positions like sales and business development – and how the real ROI of recruiting firms lies in an incredibly important, but often overlooked competitive differentiator: hiring time advantage.
Hiring Time Advantage: The Real ROI of Recruiting Firms
Hiring a recruiting firm gives you what we call a “Hiring Time Advantage”: the number of weeks that the recruiting firm can source a new hire faster than an internal hiring process could have accomplished.
This Hiring Time Advantage produces Incremental Revenue – the additional money that your company makes by getting the new hire onboard sooner (thanks to the recruiting firm’s quick work).
As long as your new employees are generating revenue and earning their keep (by making more money than their salary and benefits cost), you are almost guaranteed to make a positive ROI by hiring a recruiting firm.
For example: let’s assume that your company wants to hire a top-performing sales person with a monthly quota of $100,000 and an average monthly salary of $10,000. If you can hire that sales person 2 weeks faster with a recruiting firm than you would have on your own, and assuming 4.3 weeks per month, that means your hire is on board 46.5% of a month sooner than would have happened if you had hired via internal resources alone.
The Incremental Revenue from this hire equals the Hiring Time Advantage (46.5% of a month) x Monthly Quota ($100,000 per month) = $46,511.
The Incremental Cost of having that salesperson on board sooner equals the Hiring Time Advantage (46.5% of a month) x Monthly Salary ($10,000) = $4,651. Subtract the Incremental Cost ($4,651) from the Incremental Revenue ($46,511) and you get your Incremental Net Profit from hiring this sales person faster: $41,860 (before placement fee).
This is only one example; some hires happen faster than others, and when companies are scaling up quickly, the Incremental Net Profit can be substantial when hiring multiple people. But when you consider how much your company stands to gain by hiring a recruiting firm – even for hiring a single employee – it’s clear that the ROI is quite compelling.
The opportunity costs of a slow hiring process are potentially huge, but often overlooked. A good recruiting firm will work with your company to understand your unique culture and develop a solid strategy to hire the right people for the right jobs – faster and more efficiently than you could have managed to do on your own.
Especially when you are hiring top, in-demand talent, it’s critical to get the right people on board as quickly as possible so that they can immediately go to work producing revenue and creating opportunities for your company.
About the Author: Carolyn Betts is the Founder & CEO of Betts Recruiting, a global recruiting firm. Carolyn is a sixth generation Bay Area native and is actively involved in the community, serving as a board member of the UCSF Partners in Care, an officer of the American Association of Inside Sales Professionals, and a member of Young Presidents Organization.
Betts Recruiting focuses on fast growing, innovative tech companies to build out revenue generating talent roles to include sales, marketing and customer success at all levels. Betts has been recognized as one of the Top 100 Women-Owned Businesses, and was named one of the Best Places to Work and Fastest Growing Companies in the Bay Area by the San Francisco Business Times. Betts Recruiting has office locations in San Francisco, New York, Austin, and Dublin, Ireland.