With companies around the world still feeling the financial impact of the global pandemic, it's no surprise that most businesses are looking for opportunities to reduce costs and operate on a leaner scale to stay competitive and protect the bottom line. The human resources (HR) department may be a great place to start as the cost of hiring a new employee is arguably one of the highest while running a business.
There are many incurred costs during the hiring process, including in-house recruiter’s salaries, advertising costs, travel expenses, third-party recruiter fees, and employee relocation costs. The total cost of hiring a new employee can be as high as $5,000 or more if the company is looking for a highly-skilled professional. Let’s not forget about the risk of hiring the wrong candidate, resulting in even greater expenses. According to the U.S. Department of Labor, a bad hire can cost up to 30% of the employee’s first-year earnings on average.
Implementing HR technology is a smart strategy for companies looking for an efficient way to reduce hiring costs and improve organizational efficiency. By improving operational efficiency and enabling better decision-making, integrating HR technologies can result in significant savings and other benefits that more than make up for the system’s price.
In this article, we will explain how HR technology can reduce your hiring costs so that your organization can run as efficiently as possible while also saving money.
Impact of Technology on HR Costs
HR tech has developed rapidly in recent years, with employers around the world adopting it to ease the burden of HR departments and make them more productive and cost-efficient. Technology changes the way recruiters source and communicate with candidates, store files, and analyze employee performance. HR software such as applicant tracking systems (ATSs) and workforce management tools has been so widely used that it’s unlikely to find a company that doesn’t work with them. At the same time, other types of HR technologies are gaining traction in recent years and are being utilized by recruiters. Below are some of the most common types of HR software and their impact on recruitment costs:
Applicant Tracking System
ATS is a major component used to organize an organization’s recruitment process. Many companies use ATSs to attract, identify, and hire the best talent. It is powered by artificial intelligence (AI) that enables software to identify the most qualified candidates. When combined with other technologies, ATSs can become the number one solution for finding and hiring top candidates for specific roles. Their ability to screen applicants quickly allows them to save the time needed to sift through hundreds of resumes. Given that time and money are often interdependent in the business world, implementing an ATS is also an effective way to save recruiting costs.
First of all, an effective ATS reduces the time spent on administrative work by simply automating most tasks. Such tasks include resume parsing, filtering out unqualified candidates, sending automatic emails, and scheduling interviews—all of these can be easily handled by ATSs.
ATSs also facilitate resume screening. On average, one corporate job opening receives roughly 250 applications. However, manually going through each application is time-consuming. ATSs automate candidate screening by using algorithms that select candidates who best match the job requirements. Oftentimes, recruiters find it much more helpful to use additional candidate sourcing tools as their ATS may lack the effective sourcing features. Some companies, like Employa, offer add-ons that can be easily integrated with existing ATSs, allowing for a faster and more efficient candidate sourcing process.
In addition, recruiters can use ATSs to build talent pools and store information about candidates that can potentially qualify for future openings. It improves the quality of hires and minimizes the risks of hiring the wrong candidate.
Performance Measurement System
Performance management tools are a type of HR technology that helps companies measure and track employee performance. It usually refers to processes that focus on the skills and resources needed to improve job performance. The system helps managers write accurate job expectations, create objectives that align with organizational goals, better understand employees’ skill sets, and boost their morale.
Powerful performance management technology can significantly reduce recruitment costs and improve retention. With the right performance management tools, hiring managers can receive helpful information on employee training needs, promotional opportunities, and other HR initiatives. It leads to less downtime, higher productivity, and more revenue earned for the company. In addition, good performance management systems can translate to lower IT costs as fewer people are required to analyze the data.
Payroll Management System
Payroll management software helps recruiters with the payroll processing of the entire company. It is capable of tracking payroll and employee parameters such as leaves and tax deductions—a good-quality payroll management system can help an organization save time and reduce costs.
Payroll processing is a time-consuming task. HR managers might be spending a significant amount of time doing all the payroll-related activities, including payments, record keeping, new-employee reporting, and tax compilation. Payroll management software helps HR departments speed up the processes, which means important savings for the company. It automatically generates payslips and all of the calculations it involves, reducing the manager’s workload and the risk of mistakes.
Onboarding and Training System
Onboarding and training is another area where technology can be incorporated to simplify the process and reduce business costs. An efficient onboarding program can increase staff retention by 82%. Digital onboarding can help explain policies and procedures, complete compliance documents online, and clarify roles. Moreover, online onboarding is also an efficient way to communicate organizational culture and set employees up for future success.
With digital onboarding, everything is paperless, which means less administrative work for HR managers. New employees can access autonomous support tools and get answers to questions on a 24/7 basis instead of asking a manager for help. Onboarding and training software can also keep employees engaged and motivated by providing access to e-learning courses and tools, such as games and quizzes.
How Does Technology Reduce Business Costs
In the end, it is all about reducing costs by shortening the average time an HR manager spends on different recruitment stages while improving overall candidate quality and cultural fit. Digital tools help reduce costs by minimizing the chance of human mistakes—over half of all organizations agree that business process automation minimizes human errors. With most processes automated, HR managers can save valuable time and focus on more important tasks that may require a human touch. In addition, automating repetitive tasks eliminates paperwork and stationery, thus reducing operational costs.
HR technology can streamline every aspect of recruitment administration and significantly reduce business costs if done correctly. It is critical to invest in a digital solution that is tailored to your needs to reduce the risk of costly mistakes. With the right technology and the right tech-driven strategy, you can reduce business costs and improve the long-term quality of your workforce.
How to Optimize Your Hiring Costs with Employa
Employa is an AI-driven software that helps recruiters meet their recruitment needs, optimize hiring processes, and hire only the most qualified candidates at lesser time and cost. Employa provides ATS add-ons focused on candidate sourcing, screening, and ranking. In addition to candidate sourcing, Employa can be used to communicate with candidates, schedule emails, and help them stay tuned for updates.
Aside from sourcing and communication tools, Employa can also take care of your hiring process as a recruitment agency. We help companies find and recruit tech professionals quickly, with a rate that’s 2.5 times cheaper than traditional means. If you are wondering how to optimize your hiring costs while hiring the top talent, contact Employa for an effective solution!