Among such metrics as retention rate, time to hire, and other indexes, cost-per-hire is one of those key indicators that all hiring managers have to consider while analysing their talent acquisition procedures. Cost-per-hire reveals how much it costs a company to cover a certain job opening. Basically, it is an economic value placed on the total financial investments a business makes to engage with and recruit new staff members.
The cost-per-hire may vary significantly from company to company and depends on many external factors: the organisation size, the quantity of recruitment channels the HR managers make use of, the hiring volume, the seniority of the role that is being filled, industry specifics, characteristics of the vacant position. Research by Deloitte and Bersin shows that companies with the most developed recruiting programs on the average spend more on hiring a new employee than companies that are still shaping up in terms of recruiting processes. This means that, in order to attract the best talent, you might need to invest more in your recruiting efforts. Calculating the cost-per-hire is a perfect opportunity to better comprehend your recruiting process and the way it fits into the bigger framework of your organisation, as well as to evaluate the ROI of your hiring efforts.
So, here are 3 answers to the main questions you may have about cost-per-hire:
- What does cost-per-hire comprise?
The cost-per-hire metric includes all costs associated with filling a position, comprising such expenses as: offline recruitment events’ costs, HR software fees, hardware (e.g. computers, company phones), employee referral bonuses, recruiters’ salaries, fixed costs such as physical infrastructure (e.g. office rental), advertising expenses, education and development costs for the hiring team, candidates’ travel expenses, background/reference checks, assessments (surveys, job trials), contractors (website design, etc.), relocation costs, employer branding activities, marketing expenses, and so on.
- Is cost-per-hire a stand-alone metric to evaluate?
No, it is highly advised to analyse your cost-per-hire in conjunction with other HR metrics: paired with other key indicators, cost-per-hire may help you draw precise conclusions about your overall recruiting strategy. For example, you can measure it in relation to the source of hire and source quality: in this manner, you will be able to interpret the efficiency of different recruiting sources that bring the best talent and trim out channels that are not worth the investment. Another method is pairing cost-per-hire with time-to-hire which is another important metric to be tracked and possibly reduced.
- Which are the ways to optimize your cost-per-hire?
What can recruiters do to reduce their cost per hire and recruit talented team members in a more efficient way? HR managers may work on optimizing through reducing costs of the interviewing process, by conducting group interviews. Meeting with multiple candidates at once is a great way to save recruiters’ time and company’s money. Lastly, one of the key aspects for major cost optimization is choosing the right channel that brings the best talent on board. And there is no better solution for that than Smart Programmatic recruiting by Jobrapido: it technologically optimizes the match between the job ad and the people who see it, stepping the hiring efforts up and raising the efficiency and reach rates. The redundant costs get cut, allowing recruiters to execute a functioning well-thought recruitment approach. Jobrapido is the major player on the innovative market of Programmatic Recruitment. Combined with the Smart Intuition TechnologyTM, Jobrapido Programmatic Recruitment solution automatically matches targeted vacancies and best candidates in target, on demand.
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