What is Cost-Per-Hire?
Cost-Per-Hire is a metric used to measure the total cost of acquiring a new employee for a company. This includes all the expenses incurred throughout the recruitment process, such as advertising, sourcing, interviewing, screening, and hiring.
Calculating the cost per hire can help companies evaluate the effectiveness of their recruitment strategies and identify areas where they can reduce costs. It can also help them benchmark their recruitment costs against industry standards and identify areas for improvement.
Calculate the Cost-Per-Hire
- Identify the recruitment expenses: This includes all the costs incurred during the recruitment process, such as job postings, recruitment agency fees, background checks, travel expenses, and recruitment software.
- Determine the recruitment period: This is the period of time over which the recruitment expenses were incurred. This can be a week, a month, or a quarter.
- Calculate the number of hires: This is the total number of new employees hired during the recruitment period.
- Divide the recruitment expenses by the number of hires: This gives you the cost per hire.
For example, if a company spent $50,000 on recruitment expenses in a quarter and hired ten new employees during that period, the cost per hire would be $5,000.
Reduce the Cost-Per-Hire
- Streamlining the recruitment process: By using automation and technology to streamline the recruitment process, companies can reduce the time and resources required to hire new employees.
- Referral programs: Employee referrals can be a cost-effective way to recruit new talent, as existing employees can refer candidates who fit the company culture and job requirements well.
- Employer branding: A strong employer brand can attract high-quality candidates and reduce the cost of sourcing candidates through job boards and recruitment agencies.
- Talent pool: Building a talent pool of potential candidates can reduce the time and cost of hiring new employees, as companies can tap into the pool when they have open positions.
Conclusion
Cost per hire is an important metric that can help companies evaluate the effectiveness of their recruitment strategies and identify improvement areas. By implementing cost-effective recruitment strategies, companies can reduce the cost per hire and attract high-quality candidates that fit their organization well.