27 March 2024

The Economics of Using a Recruiter

Paul Halsall

Red Tiger Consulting

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Red Tiger Talent are specialist recruiters in Location Planning, Consumer Insight, Economic Development Consulting, Property Research and GIS. We often see hiring managers putting in considerable effort to reach out to candidates to try and recruit people themselves. This blog post applies some research and simple maths that goes some way to proving that outsourcing this task to a good recruiter is fully justified.

Cost of Workdays to Recruit

This can vary depending on the role of the hiring manager, but we think of the cost of a workday as the “Opportunity cost” – i.e. the value of the next best alternative. For example, if you work for a consultancy, what do they charge you out for per day of your time? 

Being quite conservative on this I would suggest the cost is around £1000 per day. So, for every day spent recruiting you are potentially forfeiting £1000 of income for your business. This can vary depending on the work that you do but when you are in consultancy that is broadly the rate at which you would be charged out at, particularly if you are at Manager level which is what obviously you would be if you are hiring staff.

If you are not at a consultancy then you have to think how will your business backfill the work you would have been doing if you were not involved in recruitment? I would suggest the answer is above!

Time Spent Searching

In a good year at Red Tiger Talent, we will succeed in about 35 placements using 3 members of staff. If you add up the working days per placement (after holidays and bank holidays) it works out at 20 days of work per placement. If we took a very conservative view of £500/day staff cost/opportunity cost (50% of what I mention above) and applied that to the 20 days of work, you are looking at a cost to the business of £10,000 per placement.

I would therefore argue that not only do you save on average a very conservative estimate of £10,000 per recruit but also you get the time back to focus on what you specialise in (assuming it is not recruitment). You also increase the likelihood of getting the best recruit available in the market who is likely to stay for longer as they thrive in your business. 

We have been operating for almost 8 years now and if you look at our first 2 years, 9 of our placements (over 50%) are still in their roles at the company they initially joined.  That is not bad given that the average amount of time people stay in a role in the UK is under 4 years.

So that is a cost of £10,000 to the business to do a thorough search. Now I am not just blowing our own trumpet here (or maybe I am) but as specialists in Location Planning, Consumer Insight, Economic Development Consulting, Property Research and GIS, we have over 7 years in our recruitment business and built quite a considerable network and knowledge of that network which is not easily replicated.

I would also argue that by reducing time on searching for candidates, that time would also be better spent devising/improving the interview process for candidates, especially in today’s market where speed is important.

Missing the Recruiters Network

Setting aside the cost to recruit, what you also miss out on (unless you are as well connected as companies like ours) is the network we can use to widen the recruitment net and give you a better chance to find the perfect recruit. This is where we benefit from being specialist recruiters in our key areas as we are always monitoring and nurturing that network (tracking movers, adding new entrants etc), and also, we can have informed opinions on most in our specialist areas.

Advantages of Using Experts

Being recruiters we can be somewhat impartial as to who we approach regarding roles, so we should in some respect be able to take away some bias. What we also can give you is good advice on what is achievable given the market conditions. A lot of our business is built upon trust and our knowledge of variables like available skillsets and salary levels is second to none in our areas of expertise.

With the development of AI and its way of helping to streamline recruitment processes the onus is more on us as recruiters to be consultants and advisors to help in terms of who you can potentially recruit and also to help advise on the often-hidden areas of expertise like advice on interview process for example.

The other advantage that Steve and I have is that we have been analysts ourselves so given our background, knowledge and experience we can be trusted to understand (and test) the skills required for your ideal candidate.

In summary it does make sense economically to pay for and to use a good recruiter to help you get the best candidate possible for your role. It will also save you time in the long run as we feel we are best positioned to help you find the most suitable person for your role that will thrive in your organisation. If you are interested in using our services in our areas of expertise, please do get in touch with Paul and set up a call to chat.


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Published by Paul Halsall

Paul is an experienced head hunter, data and insight specialist, trainer and coach. His experience lies in Location Planning and Mapping but more recently within Business Management, working internationally on a variety of accounts.

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