how important is your cost per hire
Global – In today’s fast-paced hiring world, it may seem like there’s no time to take a step back and evaluate what you’re spending your money on to attract the best candidates. However, when using a data-driven approach, knowing the best sources and your internal and external recruitment costs means you can use your budgets wisely while still attracting the best talent.
But is that all that matters? Let’s dive into these costs and find out what the value of these numbers really is.
What is the cost of hiring?
Hiring cost is one of the most important metrics for talent analytics. It is equal to the sum of your internal and external recruiting costs divided by the total number of hired employees over a certain period of time.
Calculating the cost of hiring in your company
Understanding how the cost of hiring is calculated can help determine the value of this metric to your company.
Internal recruitment costs
All personnel and organizational costs associated with recruitment constitute your internal recruitment costs. They may include, but are not limited to:
- Attracting talent and recruiters, salaries, benefits, travel expenses are often the highest costs when calculating CPH.
- Employee referral bonuses
- Interview cost (number of hours X hourly rate of interviewer or hiring manager)
- Applicant Tracking System (ATS)
- Training and development budgets for the hiring team
- Fixed expenses (e.g. office space, co-working spaces, utilities)
Total number of employees
This number is easiest to determine when calculating CPH. If you are using ATS, this data is always tracked and required for reporting purposes. Otherwise, this is a standard metric that can be easily tracked in an Excel spreadsheet, depending on the size of your organization and the scale of your hire.
What can you learn from the cost of hiring?
How important is the cost of hiring to your company? While this can give you an idea of your hiring costs, budgets, and where you can pick up the pace or invest more in a particular area, it’s just one metric and doesn’t cover every aspect of attracting a new employee. . You also need to consider shortages, existing talent pools, and seniority when looking for open positions.
In general, if you’re making data-driven hiring decisions, you can easily spot where you can potentially save money or reduce recruiting costs (and even hiring costs).