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With an average cost of hiring a new employee £3000, employers are looking for ways to hire more effectively. Skills tests are the answer, Skillsarena suggest.
How to Reduce Hiring Costs Using Skills Tests?
A good employee can enhance your busines but hiring employees is expensive. While cost-per-hire varies between different organisations and industries, Glassdoor estimates the average cost of hiring a new employee at £3,000. It can take six months or more for an organisation to reach the break-even point on a new employee, and, of course, there’s always the worry that you’ve hired the wrong person. This can cost even more money in the long term. Not ideal.
Moreover, with a global talent shortage making hiring harder than ever (75% of companies around the world are reporting talent shortages and hiring challenges, according to ManpowerGroup), it’s more important than ever to minimise hiring costs and get it right first time.
How can organisations reduce their cost-per-hire while still finding the perfect new employees? Skills tests are a cost-saving solution that can also increase the accuracy and retention of new hires. Here’s why.
What are skills tests?
Skills tests are assessments used by employers to gauge the skill levels and knowledge of potential employees. These might assess an applicant’s aptitude with a particular software or technical expertise in a particular role, or they might be more general assessments such as a verbal reasoning test which assesses logical thinking and processing of verbal information. Skills tests are standardised, which means that they allow employers to objectively and easily compare different potential employees for a role.
Organisations might use pre-made or bespoke skills tests in recruiting employees, or even a combination of both. While bespoke skills tests require more time and effort to develop, they can be a great way to filter applicants to find the people who will fit perfectly with the unique requirements of your organisation.
How can skills tests save you money?
While in some industries skills tests are a standard part of recruiting, other employers may be wary of them. In their eyes, skills tests may seem like another unnecessary expense in an already costly hiring process.
However, while it may cost some money to embed skills testing in your hiring process, the return on investment is substantial. Skills testing can lead to smoother and faster recruiting, more engaged candidates, and even a better employee retention rate, all of which can significantly lower recruitment costs now and in the future.
Here’s a close analysis of how skills tests can reduce recruitment costs.
Skills tests reduce time-to-hire
One of the biggest cost-saving benefits of using skills tests is speeding up the recruitment process. Glassdoor estimates that the average employer spends 27.5 days carrying out the hiring process, while data from LinkedIn shows that for some roles (engineering, research, project management, and finance) the median time-to-hire can be up to 49 days. Some of this time is necessary — employers can’t skip interviews or important background checks. However, there’s no reason hiring a new employee should take up to a month or longer. Not only does a lengthy hiring process contribute to the growing direct costs of recruitment, but it also leads to the knock-on expenses and productivity loss of a leaving crucial role unfilled.
Fortunately, skills tests can save a lot of time in recruitment. Instead of spending hours sifting through CVs, internal recruiters can set a short skills test to analyse their applicants’ skills. Depending on the organisation, this test might look for specific skills, such as English literacy, health and safety, Microsoft Office aptitude, or accounting and finance skills, immediately ruling out any applicants without these important skills. Or, these tests might be more generic, testing an applicant’s verbal reasoning or numerical reasoning abilities.
Using these tests filters out unsuitable applicants immediately, creating a faster-moving and more efficient process. By automating this aspect of recruiting, recruiters gain the opportunity to focus on only the most relevant candidates. As a result, recruitment is streamlined and optimised to help find the perfect new hire in the shortest possible time.
Skills tests make hiring easier for your HR department
Skills tests reduce the workload of in-house recruiters by providing them with objective metrics with which to analyse the suitability of potential employees. Instead of relying on subjective interviews, CVs, and cover letters alone, recruiters can use the results of skills tests to gain data-backed insights into the potential employees’ suitability for the job. This means that less deliberation is necessary. Imagine two potential candidates who look equally amazing on paper and perform equally well in the interview — it’s near impossible to make a decision. However, the slight superiority one candidate demonstrates in an aptitude test can help HR teams make the right decision quickly and effectively.
Improving the efficiency of hiring in your organisation has two main cost-saving benefits. Firstly, streamlining the recruitment process means faster and more cost-effective hires. Secondly, reducing HR’s workload means that they can focus on other strategic tasks like creating a great onboarding strategy to benefit employee engagement and retention in the long term.
Skills tests improve candidate experience and increase job offer acceptance
A speedy and efficient recruitment process that uses online, easy-to-access skills tests reduces the need for candidates to undergo multiple rounds of interviews, trips to assessment centres (which they may have to take time out of their current jobs for), and long waits for responses. With online skills tests that applicants can take easily from anywhere and in their own time, recruitment becomes smoother and easier for candidates. As a result, candidates can feel more able to take control of their application process, feeling valued by the employer and more enthusiastic about the role.
The beneficial impact on candidate experience is great for two main reasons. The biggest reason is that a great candidate experience makes it more likely that the candidate will accept the eventual job offer. This is an important consideration during today’s intense competition for the top talent. Another employer offering a higher salary or better benefits in order to poach your preferred hire could leave you right back where you started!
Secondly, an easy and hassle-free candidate experience makes it more likely that unsuccessful candidates will apply again for future roles, write positive reviews of the experience on job boards or social media, and encourage others to apply to work for your company. With talent being so hard to come by in this current day, ensuring that applicants have a positive experience with your brand is essential for improving future hires.
Skills tests increase retention with more accurate hires
Another way that skills tests can benefit your recruiting budget is by increasing the accuracy of hires, improving the likelihood that the new employee will be engaged and satisfied in their role and therefore less likely to leave. With an improved employee retention rate, there are fewer roles to be hired for and more opportunity for recruiters and hiring managers to focus their efforts on finding the perfect person for those roles. In this positive feedback loop, skills tests allow more accurate hires which provide the opportunity for even more good hires in the future.
For example, a situational judgement test may be used in recruitment to analyse a potential employee’s approach to everyday tasks and situations. While a candidate may look amazing from their CV, with heaps of relevant experience, a role-specific situational judgement test is a more accurate way of assessing their suitability for the job. Personality profiling is also used in recruitment to better understand the potential employee and how they will fit into the team. What is their people management style? How do they like to work? Will they make a good fit at the company? Personality profiling allows recruiters to pick future employees with the personality profile that will best fit the team, improving the accuracy of recruitment and reducing the risk of turnover.
Skills tests reduce external recruiting costs and agency fees
Finally, the last way that skills tests can cut recruitment costs is by reducing the cost of external recruiters or recruitment agencies. Agencies can charge 10-20% of the employee’s first year salary — no matter whether you’re recruiting a junior or executive-level employee, using agencies for recruitment can be an expensive option.
Instead, try increasing your job advertising on social media and job boards or via employee referrals. Then, use skills tests to help automate the process of finding the best applicants. By using skills tests to take control of the hiring process, your team is less dependent on these external forces. This means fewer expenses on this external recruitment support, helping you save time and money on hiring.
It might initially seem counterintuitive to start spending money on skills tests in order to slash recruitment costs, but implementing skills testing in recruitment can save significant amounts of money in the long term with more effective and efficient hires. More accurate hires improve employee retention, reducing the need for recruiting new employees in the future. Overall, skills testing can streamline and improve the hiring process, saving your organisation lots of money in the long run.
Skillsarena offer a wide range of cost-effective skills tests so that in-house recruiters and hiring managers can accurately assess the capabilities of their candidates. Available online so your applicants can access them with ease, Skillsarena’s skills tests and situational judgement tests allow you to make informed decisions and reduce recruitment costs.