Risks to employers if they pay too low of CPA when posting administrative job ads

Recently, we published an article about the risks to employers if they try to pay too little on a cost per lead (CPL) or cost per application (CPA) basis when posting job ads to sites like College Recruiter.

At a high level, many employers are tempted to pay below market rates thinking that they’re getting the ads for less money. Technically, that may be correct but they should keep in mind that they’re not really paying for the ad. Instead, they’re paying for candidates to view the ad (cost per impression a/k/a CPM), click on the ad to go to the employer’s application page (cost per click a/k/a CPC), or click to go to the application page and successfully submit their application (CPL a/k/a CPA). If employers pay too little for any these, then almost every job search site will automatically rank the ad below other, similar ads as job search sites use the CPM, CPC, and CPA as a signal for how motivated the employer is to hire so the more you pay, the more that implies to the job board that you’re motivated to hire, and the more motivated you are to hire then the higher your job ad will rank as the more likely it is that the candidate using the job board will be hired.

But is all of that true when it comes to job posting ads for administrative and clerical roles? Data gathered from hundreds of job boards shows that the effective CPA when employers advertise a job is $17 if the job function is administrative. We asked eight hiring experts to share their thoughts on the quality issues and/or other risks do employers face if they pay a small fraction of the going rate to a vendor for these leads.

• Quality Applicant Concerns with Low-Cost Leads
• Risks of Underpriced Job Lead Services
• Unqualified Candidates and Ethical Risks
• Increased Turnover from Inadequate Leads
• Legal Implications of Cheap Recruitment Practices
• Investment in Recruitment Drives Team Performance
• Undervaluing Leads Affects Recruitment Quality
• Influx of Unqualified Candidates with Budget Leads

Quality Applicant Concerns with Low-Cost Leads

When employers opt to pay a fraction of the going rate for job leads, they often face a critical issue: the quality of applicants. In my experience, cutting costs in this area can lead to a flood of unqualified candidates, which overwhelms HR teams with irrelevant applications. The cost saved upfront is quickly lost in the time and effort spent filtering through applicants who aren’t a fit.

One personal lesson I learned was when we initially tried a low-cost vendor for eLearning roles. While we received a high volume of applications, the quality was lacking, and we ultimately had to restart the process, this time paying the standard rate for better leads. Employers need to recognize that investing in quality leads upfront saves time and resources and ensures they attract talent that aligns with their needs.

Christopher Pappas, Founder, eLearning Industry Inc

Risks of Underpriced Job Lead Services

When employers pay a small fraction of the going rate for job leads—such as significantly less than the $17 per application benchmark for administrative roles—they may face several quality issues and risks. One major concern is the quality of applicants. Lower costs may result in less targeted job postings, attracting a higher volume of unqualified candidates. This can lead to a time-consuming vetting process as HR teams sift through numerous resumes that do not meet the basic job criteria, ultimately slowing down the hiring process.

Another risk is a lack of visibility. Cheaper services might not post jobs on high-traffic or reputable job boards, limiting exposure to top talent. This can reduce the pool of qualified applicants, forcing employers to settle for less-than-ideal candidates. Additionally, inconsistent or poor candidate experience may arise if the vendor lacks strong applicant tracking systems or support, which can deter qualified applicants from completing the application process.

There’s also the potential for compliance and legal risks if the vendor does not follow industry standards or data protection regulations. This can expose companies to legal liabilities, especially concerning privacy and data handling.

To avoid these risks, employers should invest in quality job advertising platforms that target the right audience, provide adequate support, and ensure compliance. While it may cost more upfront, it saves time and resources in the long run by attracting better-qualified candidates and reducing the likelihood of making a poor hire.

Steven Mostyn, Chief Human Resources Officer, Management.org

Unqualified Candidates and Ethical Risks

In my experience managing and leading numerous hiring procedures, deciding to pay a small fraction of the going rate for job leads may result in various quality issues and risks. One such concern is the potential to attract less-qualified candidates; lower spending amounts in job advertising can limit job visibility to the right talent pool and subsequently reduce the quality of received applications.

As for actual risks, if you’re not investing in reputable job boards, there’s a chance of inadvertently associating with platforms that engage in unethical practices, such as data mishandling. There’s also a lost opportunity cost to consider. When you allocate more budget to job leads, you’re not just purchasing visibility; you’re investing in the opportunity for platform features like advanced candidate sorting or priority listings, which can facilitate smarter hiring and save valuable time. Hence, while the initial cost-saving seems enticing, the eventual cost in terms of time, effort, and potential damage is far greater.

Gianluca Ferruggia, General Manager, DesignRush

Increased Turnover from Inadequate Leads

Candidates who aren’t fully dedicated or qualified for the role may be drawn to companies that pay a small percentage of the market rate for employment leads. Instead of choosing a position based on how well it fits their qualifications and career objectives, some applicants may accept it only because it is open. That means there will be a higher turnover rate since they are more prone to quitting their jobs quickly. 

This leads to frequent hiring, onboarding, and training of new staff, which raises long-term costs in addition to disrupting workflow. One way to prevent these problems and increase the number of solid, long-term recruits is to invest upfront in high-quality leads.

Adam Wood, Co-Founder of RevenueGeeks, RevenueGeeks

Legal Implications of Cheap Recruitment Practices

From an employment lawyer’s perspective, paying a vendor a small fraction of the going rate for job leads, especially for administrative roles, poses several quality issues and legal risks for employers. One primary concern is the likelihood of receiving low-quality applications. 

Vendors offering leads at significantly reduced rates may employ less rigorous screening processes, resulting in a pool of candidates who may not meet the necessary qualifications or fit the organizational culture. This can lead to wasted time and resources in the hiring process, as employers may need to sift through numerous unsuitable applications or conduct additional rounds of interviews to find a suitable candidate.

Additionally, there are significant legal risks associated with relying on low-cost vendors. Such vendors may not comply with equal opportunity employment laws, privacy regulations, or anti-discrimination statutes. If a vendor uses unethical or biased methods to source candidates or fails to protect candidate data adequately, the employer could be held liable for discriminatory hiring practices or data breaches. This not only exposes the company to potential lawsuits and regulatory fines but can also damage its reputation. 

Employers should carefully vet vendors, ensuring they adhere to legal standards and ethical recruitment practices to mitigate these risks and maintain the integrity of their hiring processes.

Ed Hones, Attorney At Law, Hones Law Employment Lawyers PLLC

Investment in Recruitment Drives Team Performance

We’ve seen firsthand how cutting corners on recruitment can backfire. Paying significantly less than the market rate for leads often results in a flood of unqualified applicants, wasting valuable time and resources. Our leadership development programs actually focus on teaching executives how to build high-performing teams, which starts with attracting the right talent through proper investment in recruitment.

Barbara McMahan, CEO, Atticus Consulting LLC

Undervaluing Leads Affects Recruitment Quality

In my experience, consistently undervaluing job application leads can increase the potential risk of quality issues in the recruitment process. Firstly, a vendor offering leads at a significantly lower rate might not have the resources to adequately screen applicants, leading to an influx of unqualified candidates. This scenario can cause a significant resource drain as much time is spent sorting out the influx of unsuitable profiles.

Secondly, job boards or vendors offering low-cost leads may not access the best talent pools, further impacting the quality of applicants. We experienced this when we opted for a low-cost provider and struggled with finding the skilled talent we needed. It can also damage employer branding if it is perceived that an organization is not willing to invest adequately in its recruitment process. 

Lower cost often equates to lesser visibility on the job board, leading to missed opportunities. Therefore, strategically investing in quality job advertising to find highly skilled HR professionals has been key to our successful talent acquisition initiatives.

Lily Wang, HR Director, Relyir

Influx of Unqualified Candidates with Budget Leads

I’d say that dramatically undercutting the market rate for job applicant leads often results in a flood of unqualified candidates. When employers pay significantly less than the standard $17 per application for administrative roles, they’re likely to face a barrage of generic, poorly matched-resumes.

For instance, one of our clients initially opted for a budget vendor charging just $3 per lead. The result? A 70% increase in applications, but a staggering 90% of those were unqualified. This led to their HR team wasting countless hours sifting through irrelevant resumes. Moreover, the few qualified candidates were often lost in the noise, leading to missed opportunities.

While low-cost leads might seem attractive, they often create more work and potentially damage your employer brand. It’s crucial to balance cost with quality to ensure you’re attracting the right talent pool.

Aaron Whittaker, VP of Demand Generation & Marketing, Thrive Digital Marketing Agency