How to reduce your recruiting budget for startups
Max Kolysh
CEO @ Dover
August 5, 2024
•
5 mins
The last thing you want to do as a startup is burn more money than you need to. But you also need top talent to drive your company forward. So what do you do?
The obvious answer is to find ways to cut costs in your recruiting budget. But there’s also the issue of missing out on top talent if you cut in the wrong places. In other words, cutting recruitment costs is easier said than done – unless you have the right tools and strategies in place.
But, as we mentioned, hiring top talent can be far from cheap. The statistic we mentioned earlier, the $4,129 per hire, can balloon significantly when you start adding recruiters to the mix. Let’s take a look at what a typical recruiting budget might look like for a startup and why this can put a huge strain on a growing company.
The “typical” recruiting budget can vary from company to company, but many startups have to funnel money into the same places. The typical recruiting budget likely includes:
Internal costs - These costs might be internal recruiters you have on staff, your applicant tracking system, sourcing tools, and other software your team might need.
External costs - These could include job board postings, ads, background checks, relocations for new hires, and recruiting agencies who usually charge a 15-30% fee.
Let’s put it this way: You need to hire 3 mid-level employees with a budget of $100k for each of them. If you have a recruiting agency handle them, you’re looking at $45-90k just for your recruiting agency fees. And many startups are spending more.
There’s a better way.
When you start researching ways to cut costs on recruiting, you’ll likely run into a lot of advice to invest in software and tools to help you save time and (eventually money) on your recruiting processes. This can work, but you’re looking at spending more to save more, which can be hard on a company that’s already looking to minimize hiring spend.
Instead, you can cut back on recruitment costs by shifting strategies and utilizing free tools. Let’s take a look at some of the best ways to cut costs:
1. Use a free Applicant Tracking System (ATS)
According to a survey by GetApp, a whopping 86% of recruiters said an ATS has increased the speed at which they hire candidates and 78% say it improved the quality of candidates they hire. So it shouldn’t be a question of “if” you need an applicant tracking system. The question is, which one do you use?
Applicant tracking systems can vary widely in price, with many companies spending thousands if not tens of thousands, on these platforms. The truth is, that most of these companies could be spending $0 on their ATS and still get world-class features.
That’s where Dover comes in. Dover is a free ATS that helps hiring teams stay organized, post jobs for free on LinkedIn, leverage AI-powered candidate sorting and get a bird's-eye view into your entire hiring pipeline. Using Dover, you can review applicants 10x faster and make sure you never ghost a top candidate again. And you don’t need to spend a dime.
2. Hire freelancers and contractors
Outsourcing your recruiting can be a huge cost saver for startups. With freelancers and contractors, you can access high-level expertise and take the pains of the recruiting process off your plate.
Usually, the problem with hiring freelance recruiters is how cost-prohibitive it can be for startups, with agency recruiters and other contractors often taking a significant chunk of change for each hire. That’s where more flexible and affordable solutions like Dover’s Recruiting Partners can help.
Dover’s Recruiting Partners are priced for startups, with no minimum commitment and the ability to pause at any time. The best part is, you don’t have to compromise on quality to save money. Our full-cycle recruiting partners have a proven track record of finding great hires for startup roles. Freelancers and contractors can be a secret weapon for startups, so make sure to utilize them strategically.
3. Leverage sourcing software
The right sourcing software allows you to find qualified candidates in your sleep. And like applicant tracking systems, you can pay the appealing price of nothing for them. Dover’s Sourcing Autopilot helps you find great candidates and use AI to generate a highly personalized email based on their profile.
The first touch is crucial when contacting top candidates, and Dover’s Sourcing Autopilot takes all the guesswork out of the process. This way, you can reach out to the most qualified candidates in seconds.
4. Offer internships and part-time positions
The Society for Human Resource Management says that most companies find internships and part-time positions to be highly effective, yet hardly anyone is doing it. Not only are these positions cost-effective compared to full-time hires, but they also give you a chance to bring on future top talent early and grow them within the company.
Internships and part-time positions allow both the company and the hire to decide if the arrangement is a good fit. And if things don’t work out in either direction, the cost is far less than onboarding and offboarding full-time positions. It’s a win-win for everyone.
5. Transition to remote work
A report by Buffer found that a shocking 98% of workers would prefer to work remotely, at least part of the time. Chances are, your employees want to work remotely, and startup founders should want the same thing. For one, offering remote work or hybrid work is clearly a priority for a huge portion of the workforce. Remote work also gives you a much wider talent pool, letting you find top candidates all over the world.
Remote work can lead to significant cost savings too. Startups often feel pressured to offer cool or trendy office spaces in expensive areas. But why spend the money when your employees would prefer to stay home anyway? The continued industry-wide transition to remote work isn’t slowing down anytime soon, and it’s not hard to see why.
6. Encourage employee referrals
If you value the people you have, you probably value their opinions too. There’s a good chance that your employees know someone who could be an asset to the company, so encouraging employee referrals is an easy and cost-effective way to increase your candidate pool.
Of course, this means you should offer incentives like a bonus if a referral makes it through the hiring process. But that bonus is far less than you would have to pay a recruiter, and the quality of the candidate is probably higher. Plus, you increase morale because you give an employee a bonus and they have someone they like on the team.
There’s also the fact that GetApp’s report also said that many recruiters found referrals led to the shortest time to hire and the best quality applicants compared to other methods like job boards, recruitment agencies and social media.
Try Dover’s free ATS for Founders
When it comes to cutting recruitment costs, there’s no time like the present. Dover is the ideal ATS for startup founders, and it’s completely free. With Dover, you get actionable recruitment data, automated hiring workflows and much more.
Dover has you covered with world-class features that lead to quality hires. Need some help making those hires? Our Recruiting Partners service also connects you to our team of expert, full-cycle recruiters at a fraction of the price of traditional recruiters.
Sure, we’re a bit biased, but we’ve proven time and time again that we can help startups find great hires. Sign up to get started with a free ATS today. It’s not too good to be true – it’s Dover.
