The real cost of recruitment is not found by calculating the sum of agency fees, advertising costs, and salaries of in-house recruiters. Focusing exclusively on recruiting-related expenditures will result in underestimating true costs by as much as 90%. Vacancy is the real, unrecognized culprit and the enemy of profitability and ultimate success. The actual cost of vacancy (COV) can be illustrated as follows:
The formula looks like this....
Provider Profit Value Per Day Worked (PPV) x Days the Position Remains Unfilled, plus The number of days and cost of utilizing recruiting bandwidth and marketing resources to fill the open position, plus The potential damage to future "past performance."
Every staffing company, including government contractors, should know the metrics for each of the above boxes. While the last one is not as simple to quantify, government past performance questionnaires use a rating system 1–5, one being exceptional, five being unsatisfactory. Let's take them one at a time.
Each day a position remains unfilled, your company is losing potential revenue. Here are some recent examples of what this means for your bottom line (you can fill in your own profit margins)...
Here is the average placement timeline in the government contracting space:
For a grand total of 6-8 months from award to revenue earn (start date). For the above Mid-level this is a loss of $20,160. For the FP Physician, this is a loss of $50,280 – these losses dwarf potential recruiting costs.
God forbid that you are paying recruiting salaries and buying marketing resources at the same time! Here's a conservative estimate of these costs:
Total Recruiting Resource Burn Rate: $3,596/month
While this may have to be amortized to include the reality that a recruiter or program manager is working on other recruiting projects, it also has to be multiplied by the number of compensated team members working on the project throughout the project timeline.
This is the most obtuse of the three factors to quantify, but it represents the industry's obsolescence. Like neglected maintenance of property or equipment, its effects will be devastating at some point in the near future when we fail to receive awards because of damaged past performance.
KurzSolutions typically fills positions in under 15 days (normally within 72 hours), reducing the number of unfilled days by 85%, resulting in real income capture for your company of between $15,000 and $40,000 per position filled. We are able to do this as a result of our greater bandwidth and dramatically enhanced resources, which lead to the following….
Since KurzSolutions foots the entire bill for marketing, recruiting, contracting and credentialing – you save approximately $2,400 in actual internal expenses for every position we fill. The overhead cost for producing a credential file is $1,500 – our expedited credentialing services are included in our RPO service subscription free of charge.
As "best in business," you will benefit from KurzSolutions' performance metrics. Furthermore, since Kurz provides a candidate warranty for every placement and practices a "continuous recruitment strategy," replacements are efficient and routine, enabling you to remain contract-compliant.
We routinely find that government contracting companies lose significant revenue due to customer inefficiency. At KurzSolutions, we work daily to eliminate delays and hold the customer accountable for timely delivery. You benefit from the time and attention of our staff as an extension of your own.
Instead of focusing on "cost per hire" federal contractors should focus on "value per hire."
Feel free to call me directly to discuss how KurzSolutions can create value for your firm - 505-379-3306
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