The end-goal of a business is to make profits, but in the beginning, there are more expenses to the company than income. And one of the biggest expenses – often rightly termed as an investment – is the people.
From costs on hiring to training to retaining talent, employees are the most valuable assets of any business. So, when you see a talented worker leave your organisation, it almost hurts physically. Today, let us understand why hiring and retaining talent is such an expensive affair and what you can do to minimise this expense. We will also delve into the role and benefits of contract staffing, and why it is important.
The cost of hiring talent
What is the cost of hiring a skilled employee? To gauge this, we need to understand the processes most companies use in their recruitment:
Finding talent: While most business-owners would love it if the most talented people were to covet their organisation, this is often not the case. Candidates have become quite picky in deciding where they are going to spend their next (on an average) one to two years. Businesses have to work hard on reaching out to them in the right forums, which means – advertising costs.
Many times, to fill specific roles, employers have to devise employment referral programs to get the most qualified candidates. While this usually means that the referred employee may stay for some time, the referring employee still draws a bonus which is an overhead for the company.
Recruitment team: Believe us when we say this – when the responsibility of hiring falls solely on the HR, they are visibly stretched thin. Which is why it is prudent to go for a separate recruitment team. If this is an internal team that you have picked, other than their salary, you are liable to pay for their benefits, infrastructure, travel costs to career events and more. If you are looking for fresh graduates, your team will probably visit campuses to conduct interviews, and this too incurs a significant cost.
Signing on an employee: In high-level roles, there are usually sign-on bonuses involved. At times, you may even have to pay for employee relocation.
After all this, we only managed to onboard the candidate. So, all your costs up till now have only been an investment without the returns.
The cost of retaining talent
Now comes the real challenge – retaining talent! What are the costs involved in this, you wonder?
- Payroll: If the candidate you have comes with experience, then they are looking at a raise from their previous role. Your payroll has to accommodate that, along with the usual benefits, periodic hikes and so forth.
- Training: No matter how seasoned your candidate is, a new position anywhere calls for some training, which, depending on the skill levels, can be a considerable expense on your pocket.
- Engagement: With an in-house team, you constantly have to think about how you can motivate them to perform better. From little perks to full-scale offsite, keeping your employees engaged is a full-time expense.
All these activities are still not enough to guarantee whether you can successfully retain talent in the long run or not.
Cost of losing talent > Cost of hiring + Cost of retaining talent
This is, perhaps, the most bitter pill to swallow for any business owner. No matter how much effort you put in, when the employee leaves, they take with them more than what you invested in them. How did we arrive at this conclusion?
- When an employee leaves, you have to start the hiring and retention activities again. There is no way to be certain if the next candidate who walks in will be just as capable.
- The replacement employee has to spend time rebuilding the relationship with internal and external teams or individuals. The opposite party may not always be patient about getting or wanting to know the new recruit, causing you possible loss of reputation.
- When an employee leaves, there is an inevitable shift in the company culture, and other employees start to second-guess their own relationship with the organisation.
How can contract staffing help?
In contract staffing, the company outsources temporary positions that are filled by a staffing agency. So, a lot of responsibilities that were on your shoulders are already offloaded to the agency. Here are some ways in which contract staffing can help you overcome the cost of hiring and retaining talent:
- The staffing agency takes care of finding qualified candidates and training them in case of gaps in skills. You may still need to be involved, but this will significantly reduce your investment of time and effort.
- The hiring process is a speedy one, considering the network of resources and talent pipeline available to the staffing agency.
- Payroll and benefits are no longer your problems. In contract staffing, the agency takes care of these aspects. And, any dissatisfaction a worker feels will be taken up with the agency and not you.
- You can hire workers on a need-basis, which is a cost-effective option. The cost of retaining the temp workforce also comes down considerably with contract staffing. And when the temp leaves, it doesn’t affect the company culture.
- It is a great testing opportunity for you. If the temp workers perform well, you can retain them as full-time employees on your payroll. If they do not, however, they are good to leave.
- If a temp worker leaves unexpectedly or is underperforming, it is the responsibility of the staffing agency to find you a replacement.
In the end, you get to decide what is best for your company. Recruitment and retaining talent are challenging tasks. But with contract staffing, you can focus on building your organisation, while still enjoying the benefits of a skilled workforce.