UK talent acquisition costs rise to £5,311 per hire, compared to £2,226 in US
David Woods, December 16, 2011
Spending by UK employers on talent acquisition rose 6% in 2011, primarily driven by expectations for business growth.
Bersin & Associates finds benchmarks and trends in spending, staffing, and key recruiting metrics. It contains responses from nearly 100 organisations and was conducted via qualitative interviews and online surveys of organisations from the Bersin & Associates database and the LinkedIn network.
The research indicates forward-thinking companies are shoring up their talent acquisition investments so that when things do start to take off, those organisations will have the right infrastructure in place to facilitate hiring.
The study found that UK talent acquisition cost stands at £5,311 per hire. Cost per hire is a key metric of talent acquisition spending since this measure indicates hiring efficiency and productivity. While spending on talent acquisition also rose 6% in the US, companies there spend $3,479 per hire, or the equivalent of £2,226.
Much of the difference in cost is due to the UK's heavy reliance on agencies charging as much as 20% to 30% of a new hire's salary in the first year.
Over the past year, one-half of all UK companies said they
reduced their spending on agencies, the research showed. These include a large retailer that has completely changed its recruiting processes, renegotiated its agency contracts, and embraced new social media tools, reducing their cost per hire 70% to £1,700. Other progressive companies are following a similar path.
In general, UK companies have yet to fully invest in a broad range of recruiting practices and tools to find quality hires efficiently.
Agencies still account for 35% of all positions in the U.K. By comparison, agencies account for just 8% of positions in
the US, where companies source candidates from a variety of lower-cost tools, including the company web site, job boards, employee referrals, professional networks and social media.
Job boards are not dead, but dying. While job boards don¹t enjoy thesame popularity as in the US they still are used to fill 9% of open positions in the U.K. Job boards have been most successful in attracting 'active' candidates those looking for jobs.
But as the global war for talent heats up, progressive organisations are reducing their spending on job boards in favor of new tools that source both active and 'passive' candidates those not actively seeking jobs.
Most firms are trying to evaluate new-hire quality by measuring metrics such as new-hire turnover, new-hire performance, and the satisfaction of both the candidate and the manager. The most prevalent means of measuring quality is through a 90-day new-hire assessment, used by nearly one-half of all UK companies surveyed.
Firms with advanced recruiting practices continually measure new-hire quality and use that information to fine-tune the recruiting process.
As UK companies diversify their sourcing strategies, in-house talent acquisition staff will play a broader role. U.K. companies already have added staff to their recruiting teams, with headcount up 14% in 2011 over the previous year.
Today, these staff members manage agency contracts, oversee agency staff, track key metrics and conduct some tactical recruiting.
Josh Bersin, chief executive officer and president, Bersin & Associates, said: "As firms adapt to today's job market, they are funding initiatives to reduce cost, improve the quality of their hires, and enhance recruiter productivity.
"UK companies tend to use agencies to source broad ranges of candidate populations, whereas U.S. companies use agencies more selectively for senior-level and hard-to-fill positions
"To bring costs down, UK companies are starting to diversify their sourcing strategies to embrace new social media tools, professional networks, and candidate relationship management (CRM) systems as sourcing alternatives."
CH2M Hill, a full-service engineering and construction firm, switched more than 50% of its recruitment advertising budget from job boards to professional networks such as LinkedIn and Viadeo, and to general social media tools including Twitter, Facebook and blogs, to secure higher-quality candidates.