Don't let Sunk Costs factor into your Recruiting decisions!

It’s now 2011 and with the new year you also get a clean slate.  It’s time to start planning for 2011 and making decisions that will help shape your year.  When starting to make these decisions, however, it is important to leave 2010 and past decisions behind.  Take stock in the situation that currently exists in your recruitment marketing strategy and make decisions based on the present day.


One of the biggest problems I see when organizations make decisions and plan, is that they take into account sunk cost.  A suck cost is a past cost that have already been incurred and cannot be recovered and should not be taken into consideration for future decisions.  For example, when deciding on if they should operate or abandon a oil mine, the oil industry doesn’t take into account the cost for building the mine but only the future expected cash flows from the mine.  They do this because the cost of building the mine is a sunk cost and can not be retrieved.


But the oil industry does not have a monopoly on sunk costs.  There are plenty in the recruiting industry as well.  Here are two of the most common I think you might deal with in recruiting:


Recruiting Channels / Job Boards - If you are like most organizations you may already have existing relationships with job boards or other recruiting channels on 1 or multiple year contracts.  That decision was made long ago but it doesn’t mean you have to just use these channels.


I fully recommend that you track the performance of these channels with recruiting metrics.  If these channels are under-performing other channels you are using slowly phase them out and make sure to re-evaluate these channels when the contract runs out.  Now I’m not saying that you should fully stop using a channel you’ve already bought inventory for but I believe you should implement and plan your job distribution strategy like it is not an issue.


Technology – When evaluating the technology that you currently have in your recruiting organization, you need to look at it from the perspective of what in the future do you want it to do and what goals you want to achieve from its implementation.  If your current technology doesn’t and will not do what you need it to do then the cost (training, price, etc.) associated with it is a sunk cost when looking at other potential solutions.  As you’ll have to re-train your staff anyway with the new methods, goals and processes.


The key with making good recruiting decisions is to make them with today’s situation in mind.  Do not get hamstrung by bad decisions in the past as they are irreversible and should have little impact on future decisions.


Originally posted on the SmashFly Recruitment Marketing Blog.

About the Author: Chris is the Marketing Analyst for SmashFly Technologies, the creators of the first Recruitment Marketing Platform which enables companies to easily distribute and most importantly measure the performance of their job ads. The platform also provides Recruitment CRM, Mobile Recruiting, Resume Sourcing, Web Commercials and Social Recruiting functions

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