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11September
2013

Budget optimization for recruitment: savings reserves

HRD-Ukraine, № 8 (239), 2013

 Article written by Inna Vorotnikova

 CEO of NRG Company

Воротникова Инна

Inna Vorotnikova
CEO of NRG Company

 It is said that money is not wealth, wealth is thrift and intelligence.

People have needed economy and thrift since olden times. Popular wisdom says that without economy and thrift it is impossible not only to save personal wealth, but also there is a possibility to spend everything that you saved previously. Economy becomes a hot topic in entering the conversation about budgets. “Economy” and “optimization of budget” are different concepts; however, their target is the same to get good result at minimal level of costs. Most of international companies have established budget on personnel department, recruiting. It is known that in Ukrainian leading companies, costs on recruiting are foreseen in the articles of basic expenses. In small businesses, budget of minimal expenditures could be totally absent.

Could all planned projects be realized by workforce of HR-department, limiting itself on costs of staff’s salaries?

Do you have a leading company that optimistically and speedy goes further, establishing budgets on “speed and amortization”? It does not matter in what company you work, you will be interested in success and stability with minimal investments and maximal results.

Let’s consider key working balances of economy at recruiting costs: (referring to a table).

It is important to remember that money does not solve the problem, concerning budget of a recruitment project and a promised high-paid remuneration for a qualified professional. Creativity and ability of a specialist help to solve all problems. A good example of it is a pharmaceutical company. A consultant of a recruitment company has chased for a main technologist in the competitive company, who is responsible for the development and production of tough medicinal forms (TMF), for a long time. Recruiter has spoken to the main technologist on the telephone and at face-to-face meeting. The main technologist was too loyal to the company that he did not want to consider a new job offer. In some time, a consultant of agency has found out that the main technologist wished he had had a professional training abroad, which present CEO refused to pay for. Recruiter focused on this situation and informed another employer about this issue, who decided to pay for the training.

The technologist was informed that this was a prize trip, since he was the most professional specialist of the country. After the return, a consultant has arranged additional negotiations with the hero. Then, it was identified that he was interested more not in the big salary and other material values, but in laboratories, modernized equipment, and other possibilities of getting high-qualified degree and attending trainings/ courses. The main technologist agreed to become a member of the new company due to satisfaction of his requirements. Thus, man should save money intelligently: the first employer saved money based on holding of important worker and lost him as a result. It may be calculated how much money he should spend in order to find a new main technologist. The second employer invested his money (not a big sum of it) into the deal that was important for the specialist, owing to which he attracted him to his company.

Experienced HR-managers recommended making a brand of employer and support it inside and outside of the company. Creation of brand depends on financial, moral, and physical position of professional team work. However, in the labor market, a good brand could help to save money on recruitment, since the level of personnel quitting will be decreased, and new workers, pretended on vacant positions, will try to make out with their interview successfully.

Table. Possibilities of budget optimization for personnel selection

  Article of Expenses  

Fact

Reserve of savings

Expenses for the operation of the recruiting department

The budget consists of (depending on the size of the business):

• the sum of the salary for the department’s employees;

• mandatory charges and taxes associated with payroll;

• travel expenses, vacation, sick pay;

• motivational incentives for the personnel.In the end the amount turns out to be impressive 

• Full or partial reduction of the internal recruitment department, work on the improvement of the specialist-recruiter’s effectiveness (which also does not have to be expensive –use the maximum resources from the Internet)

• The transfer of the recruiter’s function to the internal provider (as an option – the full transfer of the function to outsourcing): but here it is important to measure what is better for the given company– working with the external provider or the internal department 

Expenses for additional training of the employees of the department

• Expenses for trainings, seminars, Расходы на тренинги, семинары, advanced courses of qualification

• Training using the less expensive options (again, the use of Internet), the introduction of mentoring of the beginners by the experienced recruiters, the use of shadowing methods (when the beginner follows after the experienced one like a shadow, absorbing all the possible knowledge),the formation of the habit to regularly share ideas and mistakes in the company

• Attraction of external providers who have the required certified managers 

Expenses for the formation of a personnel reserve that consists of employees and job hunters

• Temporary expenses for the internal recruiters for the selection and assessment of the potential candidates

• Organizing and holding the assessment centers 

The search and the analysis of the new effective tools for the formation and retention of the internal personnel reserve:

• Explanation of the benefits of having a personnel reserve to the leaders (for example, it is a good replacement for them in case they go out of town/sick, the possibility to appoint a follower to your position in order to take a higher position yourself)

• The calculation of the efficiency of the tools “assessment-center”: possibly, it would be more convenient for your company to have an external provider, or vice versa, your company has grown to the point that it is time to create your own “assessment center”, and such a step will repay in the near future 

Expenses for advertising in recruiting:

• advertising on billboards;

• advertising in subways;

• contextual advertising;

• promoters;

• posting and distribution of job ads;

• advertising on TV and in mass-media;

• on open internet resources;

• paid advertising in social networks 

• The biggest share of expenses on recruitment is specifically for this article

• Huge time and effort is required to process the incoming information, not always with positive results 

• Search of supplier who is specialized on the development of electronic systems of personnel record will help to save time for the arrangement of tasks and their adoption into new system.

• Long-term contract with a supplier of program software will help to come to an arrangement about a good cost of technical support and free training of employees.

• Arranged business processes that are found of inner of the company with the support of special program software will help to improve interchange of personnel and to reduce many processes of personnel search. 

Purchase of specialized software

Purchase of the specialized software for high-quality work of the personnel department

• Search of supplier who is specialized on the development of electronic systems of personnel record will help to save time for the arrangement of tasks and their adoption into new system.

• Long-term contract with a supplier of program software will help to come to an arrangement about a good cost of technical support and free training of employees.

• Arranged business processes that are found of inner of the company with the support of special program software will help to improve interchange of personnel and to reduce many processes of personnel search. 

Regular purchases of specialized market research in the form of a salary review

More and more actual for the HR department is such a tool as the survey of the labor market and wages– in particular, this tool allows to reduce the inefficient expenses on payroll

• Buy only those reviews for which parameters of interest are available for the field that you are interested in

• Order individual reviews in which there is full information about the direct competitive environment

• Sometimes the survey of the market can be done with your own powers 


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