Maximize Profitability: A Comprehensive Guide to Cutting HR Costs in 2024

Economic crises invite declining sales and profits for small and big businesses. Especially recession in the global markets impacts big enterprises and small export businesses. 

How do businesses manage? 

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Businesses have to adopt cost-cutting strategies and depend upon lay-offs to sustain their operations. They analyze the business workflow to eliminate unnecessary costs. Companies target their hiring costs to keep the business afloat.  

But would it not impact the business performance? 

Often businesses make the mistake of firing their employees to save cost, instead of optimizing their business processes. In the majority of situations, companies can run cost-effectively by hiring and retaining top talent while enhancing their hiring workflow. 

How can a business optimize its hiring process and sustain recession?

There are many ways to cut hiring costs including cost optimization, reviewing compensation plans, etc. Of all, one strategy stands out and completely changes the way recruiters hire people. 

Outbound Recruitment 

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Outbound recruitment is a cost-effective hiring strategy, allowing recruiters to attract top talent while reducing hiring costs. It involves actively prospecting and reaching out to qualified candidates to hire them. Recruiters spend their time engaging and strengthening the relationship to ensure that these top candidates choose their company when a vacancy arises. 

In today's blog, we will talk about the top 7 strategies to cut hiring costs and maximize business profits. We will discuss in elaborate how outbound recruitment can prove to be an effective recruitment strategy for hiring top candidates. First, let's start by understanding why your business should focus on cost-cutting. 

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What Is The Importance Of Cost-Cutting In The Business? 

Every business has three types of costs while running operations- good cost, bad cost, and best cost. 

• Good cost means expenses that are essential for business survival, such as setting up machinery, getting marketing tools, hiring people, etc. 

• Bad cost means expenses that aren't linked to business operations or profits directly. They lead to resource wastage and include expenses, such as spending on additional machinery, hiring additional people unnecessarily, etc. 

• Best cost means expenses that add uniqueness to the company and help the business to differentiate and book profits, such as investing in social media for sales and awareness. 

Businesses aim to cut costs by reducing the good cost and eliminating all the bad costs. This helps them to enhance their profitability and achieve long-term success.

The main aim of cost-cutting is to optimize and efficiently run the operations, instead of solely trying to cut expenses. But why should businesses give extra attention to cost-cutting? 

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1. Economic Adversities- Economic conditions are dynamic and constantly affecting business profits and revenue. This makes it difficult for businesses to manage all the expenses and survive the recession. Cost-cutting helps them to optimize operations and expenses, which helps in sustaining the cash flows and business operations. 
2. Reducing Margins- Dynamic markets and inconsistent demand force businesses to shrink their margins. They are compelled to operate on a small amount of profit and survive via break-even profit. Cost-cutting provides an opportunity to maintain profitability and grow business gradually. 
3. Increasing Competition- Rising competition forces businesses to optimize their workflows and create a differentiation to stand out. Cost cutting helps the business to offer competitive prices and invest more in product development. These additional funds can help departments, such as marketing, R&D, etc. To experiment and attract more audience. 
4. Innovate- Innovation is crucial for businesses to survive and delay the decline phase. A company spends enormous amounts in research and development to innovate and bring unique solutions. Cutting costs help them to divert more funds to innovation and invest in new product development. This becomes a growth driver and helps to overcome competition efficiently. 

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Businesses often confuse cost cutting as completely eliminating certain expenses and bringing major changes in business operations. This will do more harm than good. This will create an environment of resistance and might hamper business capabilities. It will impact the business by reducing the ability to meet future demands or exploit new opportunities. 

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How Can HR Help Cut Costs? 

IMAGE: A visual representation of all the strategies "How Can HR Help In Cost Cutting"

Strategy 1: Work Allocation 

Strategy 2: Streamline Workflow 

Strategy 3: Review Compensation Packages 

Strategy 4: Training Cost Optimization 

Strategy 5: Leverage Technology 

Strategy 6: Strength Employer Brand

Strategy 7: Eliminate Bottlenecks

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Of all departments, cost-cutting impacts the HR team the most. They have to fire people, freeze hiring, deal with unqualified candidates, and much more while having to attract top candidates with competitive compensation.  Additionally, they need to optimize their processes and ensure cost efficiency, while ensuring a strong workforce. 

How can recruiters achieve cost efficiency and a competitive workforce? 

Forecast And Plan Future Hiring Needs 

Recruiters must spend time understanding business needs to forecast the hiring needs. Based on this analysis, they shall map out their hiring efforts to build a healthy workforce. Additionally, they must operate with a cost-efficiency mindset to support business survival. 

How can HR teams support cost-cutting initiatives? 

Analyze, Eliminate, Optimize! 

Recruiters must start by analyzing and identifying the good, bad, and best costs. Further, they must aim to decrease their expenses and optimize their workforce cost. Optimizing the expenses will leave the team with additional funds to reinvest in the business. Finally, they will upgrade the hiring process to attract and hire top candidates. 

Below are the top 7 actionable strategies to cut hiring costs and drive business growth. 

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Strategy 1: Work Allocation 

IMAGE: Work Allocation pointers displayed via visuals in a tabular format "Adopt Diverse Work Allocation Strategies" 

1. Outsource
2. In-house 
3. Redistribute internally 
4. Hire temporary workforce
5. Restructure teams 

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Recruiters' priority is to optimize costs without hampering the workforce and business performance. Since most companies rely on layoffs and cutting the pay of employees, it degrades performance and has a direct impact on revenue. 

Solution? 

Diversification of Workforce

Recruiters can diversify the workforce and adopt various strategies to ensure cost efficiency without compromising work quality. Here are 5 ways recruiters can allocate the work without worrying about business growth. 

1. Outsource- Outsource certain jobs and tasks to third-party teams, which have the experience and expertise to handle the work seamlessly. This will save your hiring time and you need not spend a lot on their training and other perks. Outsourcing can also help relieve the burden off internal teams, ensuring that the work quality does not affect. 
2. In-house- Instead of relying completely on outsourcing, recruiters can turn their focus on building a quality in-house workforce. This is suitable for long-term projects or requirements, demanding in-depth business knowledge and expertise.  
3. Redistribute Internally- Another way is to distribute the work and responsibilities within the team internally only. This will involve diversifying the job role of an employee and enabling them to expand their work scope. This saved hiring costs and training resources. 
4. Hire Temporary Workforce- Hire freelancers, independent contractors, and other temporary employees for short-term projects. This helps to exploit new opportunities without worrying about the business's capacity. Businesses can save resources and earn greater profits by meeting unexpected demands.   
5. Restructure Teams- Recruiters can opt for internal movement within the organization and restructure the teams to meet the business needs. This involves analyzing the capabilities of each employee and restructuring the teams based on employee strengths and weaknesses. The aim is to reduce hiring costs and effort, without compromising on the opportunity. 

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Strategy 2: Streamline Workflow 

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Often, the recruitment costs are high as the process itself is not optimized. There are overlapping functions, delays, unnecessary approvals, etc. This increases the cost and adds redundant steps to the workflow. 

Solution? 

Streamline Recruitment Workflow

Recruiters can adopt various methods and streamline the hiring process to enhance its efficiency. Some helpful strategies are: 

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• Automate parts of the hiring process, such as vetting, screening, application tracking, sourcing, etc. There are tools for each process and you can automate them based on your requirements. Moreover, they reduce the chances of biases and get the work done efficiently. 
• Opt for outbound recruitment which enables the recruiters to target specific ICPs and hire top talent. This helps to save hiring costs by eliminating the ambiguity of job roles and finding the ideal candidate.

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Recruiters shall aim to create a consistent hiring process to offer a positive hiring experience to the candidates. Moreover, every time a hiring need will arise, the recruiters shall have a clear map to tap the top candidates. 

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Strategy 3: Review Compensation Packages 

Compensation strategy and flexibility are critical to attracting and retaining top talent. If the candidates find the pay less attractive, the company might lose qualified candidates to competitors. Contrarily, paying more than the industry average will cost the company. 

Solution? 

Review Compensation Strategy

Recruiters shall study the market and identify the industry standards for a particular job role and industry. They shall highlight the employees with salaries beyond or below the industry standard. Recruiters then must take measures to extract true value to match the pay. 

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• For salaries over the industry standard, recruiters can include either altering the compensation package or revising their scope of work. It will involve reviewing the benefits package and removing any unnecessary perks offered. 

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• For salaries under the industry standard, recruiters can revise the compensation and offer a higher value. This will help retain the top employees and help to build a competitive workforce.

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Strategy 4: Training Cost Optimization  

Businesses have many training modules and programs for their employees to maintain competency. HR keeps adding new training modules to meet the dynamic market and increasing competition. This lays the burden on the HR teams since building a huge library of training material burns a hole in the pocket. 

Solution?

Optimizing Training Cost

Recruiters can optimize and reduce their training costs in various ways. It will start by creating a proper training plan and mapping out the job training requirements beforehand. 

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• Opt for third-party training professionals, which will save time and effort to build a complete training library internally. Also, this will save the money wasted on obsolete training programs, which are no longer relevant. 

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• Eliminate any unnecessary training programs, which are not useful or relevant to business now. The training material must be revised every few months to protect its true value.

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Strategy 5: Tech Stack Consolidation 

Recruiters rope in various tools to help in the hiring process. This could include automation tools to ease out the admin work or reporting tools to better analyze the data. However, often, recruiters end up with way too many tools without truly extracting the value of any of the tools. 

Solution?

Tech Stack Consolidation

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Tech stack consolidation means stringing together all the tools and software to build a proper workflow. This helps to remove redundancies and complete exploitation of each tool. How can recruiters do this?

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• Start by reviewing all the tools and software and save in renewals by opting for yearly plans and combo plans. Opt for sites that offer lifetime deals where you can subscribe to apps at minimal costs by paying only once. 

• Remove and replace redundant apps by carefully analyzing the tech stack and opting for one-done software. Opt for tools that get more done, instead of subscribing to multiple apps doing the same or individual tasks. 

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Strategy 6: Strengthen Employer Brand 

Recruiters spend a lot of time attracting and retaining top talent, while also having to deal with enormous unqualified candidates. As a result, the hiring cost increases and businesses have to spend more on advertising and job board to find qualified candidates.

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Solution?

Employer Branding

Employer branding means taking measures to enhance the company's perception as an employer for candidates and employees. It aims to build a positive narrative for the company so that top candidates willingly join the company and serve with complete loyalty. But how to strengthen employer branding? 

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• Use social media to attract and engage with desired candidate persona. This will save money and create a positive impact on the candidates. Recruiters can share valuable information, highlight employee value propositions, and build relationships with desired candidates to hire them when the vacancy arises. 

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• Opt for tools to automate the hiring process and reduce biases. This will help strengthen the DEI efforts and create a positive impact on candidates. Moreover, companies will be able to attract a larger number of candidates, including underrepresented groups. 

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Strategy 7: Build Talent Pools 

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Finding qualified candidates is the biggest hiring bottleneck for recruiters. Increasing spending on job boards and marketing solely won't help. Moreover, this inefficiency adversely impacts business revenue and operations. 

Solution?

Talent Pools

Recruiters must spend time and build a talent pool with qualified and deserving candidates that are fit for the business hiring needs. It will help them have qualified and engaged candidates all the time of year, speeding the hiring process whenever a vacancy arises. Moreover, it will save the internal team from the burden of covering for the missing employee, ensuring employee satisfaction.

• Leverage social media to source and engage with top talent and fill the talent pipeline. This will help strengthen the employer brand and talent pool together. 

• Opt for a multichannel hiring strategy by employing various channels for sourcing and engaging with candidates. This includes platforms such as Twitter, FaceBook, WhatsApp, job boards, referrals, etc. to find qualified candidates and nurture them!

Bottom line: You need not opt for all the strategies together. Recruiters must analyze the business's current situation, needs, and priorities to decide on a few strategies to cut hiring costs. They must evaluate the ROI from each of the strategies before adopting it permanently. This includes studying the business impact and matching it with the investment in each strategy. Additionally, they must account for any risk factor and draw a timeline for ROI to ensure business continuity and growth. A proper timeline will help to plan the implementation and budget ensuring cost efficiency.

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Maximizing Cost Efficiency: The Power of Outbound Recruiting to Reduce Hiring Costs 

How does it feel to have to go through hundreds of applications only to find none of them the perfect fit for the job? 

Recruiters have been there, where they receive a storm full of unqualified candidates after posting a job vacancy. This wastes recruiters’ time and effort plus the money spent on job boards and marketing. So, what is the solution?

Outbound Recruitment 

Outbound recruitment is a proactive approach to sourcing and engaging with qualified candidates. Recruiters start by building a prospect list of potential candidates based on a specific candidate persona. They target a small particular group of people and reach out to them to engage and build interest in the company. Since the approach is personalized, recruiters get to attract and hire top candidates cost-effectively. Moreover, they can build a strong talent pool that eases the hiring process. 

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But why outbound recruiting?

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• Recruiters can target specific persona to reduce any inefficiencies and save their resources wasted on unqualified candidates. It enables them to target even the underrepresented and passive candidates.

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• The hiring efficiency increases and the company can build a competitive workforce. Moreover, it positively impacts the employer brand by strengthening it as a by-product. 

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• Recruiters have enhanced response rates since the whole campaign is personalized and aims to provide value to the candidates. This also provides candidates with a positive hiring experience, improving the employer's brand. 

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Now the real question: How to reduce hiring costs with outbound recruiting?

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• Reduce Company Turnover Rate: This strategy enables recruiters to target a specific ICP and hire the desired candidates without experimentation. The result is increased hiring efficiency, where the recruiters can build a competitive workforce of qualified candidates. This reduces the turnover rate and saves the costs of replacing a bad hire. 

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• Get Qualified Candidates: Outbound recruiting is a proactive approach where recruiters actively seek qualified candidates. This eliminates the chances of unqualified candidates and helps to get the top candidates. These employees help to build a competitive workspace and possess a great sense of company loyalty. Additionally, with outbound recruiting, recruiters can target passive and underrepresented candidates. 

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• Effective Hiring Strategy: Outbound recruiting is a personalized approach to sourcing and engaging with candidates. Recruiters share valuable information and highlight company culture and values, boosting engagement. This leads to improved response rates, a high offer acceptance rate, and reduced hiring and screening time. Moreover, recruiters get more control over the hiring campaign. 

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Bottomline: Recruiters can adopt outbound recruiting and experience cost efficiency in no time. It helps to streamline the process and embrace the multichannel hiring strategy. Moreover, it eliminates various hiring bottlenecks and helps in hiring the top talent. Additionally, recruiters can embrace technology and build a stronger talent pool by proper forecasting and planning business needs to cut hiring costs. 

Reduce Hiring Costs in 2023 with Outbound Recruiting: Nurturebox 

We talked about how technology plays an important role in recruiting costs, be it to automate or remove redundant tools. Our advice?

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Cut hiring costs and opt for HR tools that automate the hiring process without increasing the burden. They should integrate with the existing HR tech stack easily and make hiring effortless. Our pick?

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Nurturebox: The Ultimate Solution To Cut Hiring Cost

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Nurturebox is a talent engagement solution that helps recruiters to source and engage desired candidates seamlessly by eliminating all the admin work. It helps in embracing the outbound recruiting process by presenting all the features essential for engaging with qualified candidates. You can build a strong talent pool with NurtureBox without worrying about unqualified candidates or increasing hiring costs.

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NurtureBox is a free chrome extension that helps recruiters to nurture qualified candidates on desired platforms without the hassle of navigating through hundreds of tools. With a simple download, recruiters can integrate the tool with their tech stack and engage with desired candidates. Hiring was never this easy!

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