Recruit Affordably – yes, it’s possible! The cost and options for hiring support for SMEs

The cost of recruiters has always been problematic for small businesses who often try and go it alone, out of necessity.  However medium businesses, who have often been able to afford recruitment support are now being more careful with their expenditure in the current market.  In many cases they still need to hire… but need to ensure any outlay is money well spent, so there can be temptations to carry out the hiring process themselves.

It’s not so black and white as ‘Agency VS DIY’ any longer.  There are more hiring options now but many businesses still associate recruitment support with ‘Agencies’ and therefore the big fees that can come with that.  Agencies have traditionally charged between 10-18% of a new starter's salary, more again for senior roles, which can be prohibitive.  For instance, for a 40-hour-a-week job just paying the living wage of $27.80 per hour (as of 1 Sept) an agency fee would be around $8700.  It’s no wonder SMEs baulk.

Below I will clarify the hiring options available in New Zealand, focus on suitability for small and medium enterprises, then outline the general cost, in order from lower to higher.

Working out value for money when recruiting can be difficult because staff don’t stay as long as they used to, but agency fees have generally remained the same.  If a company gets 10 years from a person, then agency fees would be great value for money.  And I’m sure there are many out there that are still worth their weight in gold.  If you hire a person that really helps you shift the needle in your business and takes it to a whole new level… and they stick around, then what you paid for them won’t matter.  And in specialist areas, agencies may have networks and be able to reach people that you just can’t.

However if you’re hiring for roles where finding candidates isn’t hard, but perhaps finding the time to assess them is, then consider alternatives.  Before you decide on the best approach for your business or vacancy consider (stolen from an article I wrote on the subject in 2013) the below questions:

Capability: what recruitment skills and knowledge are within your business?  Do you have the internal resources to cull CVs, interview,  reference check, etc?

Time and effort: how much will hiring distract from other important work and how much will DIY cost you in time vs. full service through an agency or outsourced recruiter?

Scarcity of the person sought: will they be hard to find or will you get mass applications? Either way do you have the systems to adjust your approach?

Repetition: is it a role you hire for often? So would a ‘go to’ kit or easy accessibility to previous candidates be of use?

Criticality: how long can the company survive without this role filled?

Employment brand: do you have one, is it positive and will it attract candidates?

Cost: given the above how much are you willing to pay to remove the hiring headache?

Great hires are always priceless however you can find and engage them affordably… hopefully the above has given you some ideas on how to do so.

JULY 2024