Contrary to what a lot of us believe, Human resources are about a lot more than just recruitment or managing the exit interviews. There are a lot of compliances involved, there is this responsibility of ensuring that the compliances are well in place, the compensations are adequate, the employees i.e. people like us keep engaged, we get training as and when due and that at the end of the day, all of it is done at the minimal budgets possible because HR Budgets- What is that even and how do we exactly reduce recruitment costs?
Believe us when we say this, we totally understand the pain that an HR professional has to go through every day. The job of making the firm a good place to work is thankless after all.
However, we often fail to understand that all these underlying costs which fall out of the HR budgets and spill over into the departmental ones as miscellaneous often cost a lot to the organization on the whole and adequate steps should be taken to reduce recruitment costs.
Ways to Reduce Recruitment Costs
Let’s take a different approach here. We first list out the reasons why the recruitment cost increases and then talk about how to bring that cost down effectively.
1.The Cost of Training & How to Save It!
Training cost is one of the most costly affairs during the recruitment process and adequate steps should be taken to Reduce Recruitment Costs incurred during training. This is relevant for almost all the firms which are technology-intensive or are in any of the financial domains.
The average price to pay per training ranges anywhere between one lac to even three lacs. If we talk about small or medium-sized firms, the number will come somewhere around a minimum of twenty-five thousand per training session. Now, how many such sessions happen per year- maybe two, at max four i.e. one per quarter. Sometimes just one too but then a lot of money gets spent. With all due respect but more often than not, employees either find their training boring or feel that not much value has been added to their skill set.
After all, how much can you expect to learn in a two continuous day of a workshop when calls about the work status keep coming in all the time?
Now, imagine a scenario where there is a standard portal that acts as a knowledge base whereupon you can keep building the content. The employees act as contributors too. Add another functionality to this bucket and it will be that this is a self-learning AI model which processes information and queries over time, maybe even sources data from external sources and keeps itself updated.
How much would such an option cost you? The initial implementation charges which would amount to a third of a budget your firm keeps for training and some nominal monthly retainer-we will leave that negotiation to you though. Use of Artificial Intelligence in talent management can prove to be of great use.
On average, you can expect a reduction of a minimum of 30 to 40% in the first five years of the implementation. And when McKinsey did it i.e. it built its own knowledge base and then keeps earning from it by expanding it even further, don’t you think it is worth a shot.
2. The Cost of Hiring the Right Candidate
It isn’t uncommon for the HR team to feel it afterwards-” gave the interview for this guy” OR “She sounded so smart during the interview”.One of the major challenges faced by the HRs. Also, there are a lot of people who are too good at the work they have to do but find it hard to ace an interview. It could be because of their personality or simply because they are introvert or lack confidence. Sometimes, a lot of people do not come out as people pleaser in their interview quips and a lot of other times, there are people who stick to the point are honest and do not boast. It isn’t uncommon to miss out on such candidates no matter how suited they are for the profile. The result is- you either are stuck with a sub-par candidate or you have to start the hiring process all over again.
Thus a lot of time and resources get wasted. And every time you hire a wrong candidate, consider about 40% of their salary paid monthly as a cost that you are incurring unnecessarily.
Now, consider a solution whereby you can perform sentimental and behavioural analysis and match it with the historic data to ascertain how confident that candidate is or if they are just being lucky at that time or they genuinely know their stuff. An in-depth analysis like this can help you ascertain the key traits of the candidate.
Also, features which can provide an option for dynamic testing of the skill-set can further help you filter out the right candidates. Depending upon the accuracy with which you have been hiring all this while, such an artificial intelligence-based solution can help you save a minimum of 10% of your hiring costs.
3. The Cost of Continuous Calling
Those phone calls add to the bill too. So does having a subscription plan for sourcing external resumes. For a mid to large-sized firm, which has a pool of talent sitting in-house, it makes absolute sense to check amongst the ranks first.
It shouldn’t come as a surprise but a recent Harvard research suggested that the firms who hire people amongst their ranks have the highest y-o-y profit growths.
The continuous calls and the subscription costs can be cut down significantly if you have a solution that can match up the candidates accurately with the skill-set required. While one may say that you can put up filters and that should be equally good, yet that is not how things work. When you have to choose an employee, it is more than just filters that count. One needs to match the specific keywords relevant to the business. A detailed analysis of the entire resume needs to be done too to ensure that the match type is relevant to the context as well. With a human- HR, this process could take hours and multiple man-days, with AI, it takes minutes. And how much cost that can save- well, you just calculated that in your mind, didn’t you?
While there are certain things where technology can help cut costs and reduce recruitment costs. There are multiple things where the human intellect seems irreplaceable; at least for the next 50 years given the current rate of advancement. Being an Artificial Intelligence startup ourselves, we believe in the power of artificial intelligence combined with human intelligence. After all, that is how the best things happen- by cooperation and not by replacement of the stakeholders.