Today’s recruitment world is fast-moving and dynamic. As new jobs are being created every day, analyzing cost per hire is always a priority for companies. So, as a hiring manager, it is your responsibility to make the most out of the hiring budget. Reducing your cost per hire is indeed a gruesome task. So, here are our insights on how you can minimize your cost per hire without compromising your recruitment quality.
Did you know that it can take up to six months for a company to make up the money it spent on a new hire! So, before jumping into how’s, let’s take a brief look at what is the cost per hire and how important it is for your company.
What Is Cost Per Hire (CPH)?
Cost per hire is undeniably one of the most important recruiting metrics that recruiting managers need to keep a track of at all times Cost per hire (CPH), as the name already suggests, is the overall amount that costs you for every individual hire.
How To Calculate Your CPH?
Understanding how to calculate your cost per hire will not only help understand the value of this metric but also eventually how to reduce your cost per hire. Talking about formulating your CPH, the sum of your internal and external recruiting costs, divided by the total number of hires within a given time. Here is all you need to know about how to calculate your CPH.
- Internal recruiting costs – Internal recruiting costs include all the expenses related to your organization and staff. These expenses could consist of-
- Employees’ salaries, benefits, travel expenses, WFH reimbursements and so on.
- Bonuses given to employees
- Expenses for Recruitment tools like an Applicant Tracking System
- Costs and expenses for upskilling employees and in learning and training programs
- External recruiting costs – External recruiting costs includes all outside the office expenses. External expenses may be less than the internal expense, but still they add up to a huge amount when you’re hiring in bulk. These include-
- Expense of conducting background checks
- Money spent on various agencies like marketing and advertisements
- Employer branding costs
- Total number of hires – This is most probably the easiest to determine while calculating CPH. The best way to track the total number of hires is to utilize an Applicant Tracking System. An ATS can automate and track your total number of hires.
Now that we’ve covered what exactly is CPH and how to calculate it, let’s skip to the good part- How to minimize your cost per hire.
Here are 5 tips on how you can minimize your cost per hire.
Build A Talent Community In Advance
Recruiting great employees amidst the sea of eligible candidates can be a bootless errand. So, building a talent pipeline of qualified candidates can do wonders for reducing your cost per hire. You might be wondering how a strong talent pipeline helps in reducing costs? Here’s how it is.
When a position opens up in your organization, you can source talent from this talent pipeline and hire an employee faster. This should help you save a bunch of external recruiting costs like advertising the job and interviewing wrong fits. So, recruiters should engage with the candidates and build a talent community that they can refer to in their future recruiting.
Leverage Social Media For Hiring
Over the years, social media has made a huge impact on our lives. In fact, it is a major part of our lives. Everyone uses social media, not only for socializing but even for a job hunt. An SHRM study also found that nearly two-thirds of organizations have hired candidates who were sourced through social media. So, social media is a free and widely popular recruiting platform where you can get valuable candidates without spending a penny.
Your social media accounts can be a great way to provide your potential employees, a glimpse of your company’s values, goals, and day-to-day operations. So, using social media will not only reduce your cost per hire but also help you target great candidates and hire great employees.
Invest In Recruitment Automation Tools
They say time is money. So, you can save a lot of time and that’s why expenses by investing in recruitment automation tools. A recruitment automation tool is simply software that is designed to automate the recruiting process. The most commonly used recruitment automation tool is an applicant tracking system. An Applicant Tracking System is an all-in-one recruitment automation software that is used by many recruiters to optimize their entire hiring process.
So, instead of doing tedious tasks manually, suitable recruitment software can automate various elements of your entire hiring process. This will help you speed up your hiring process and save you tonnes of money on hiring great employees.
Use an Employee Referral Program
Employee referral programs are long-term hiring strategies that can help you minimize cost-per-hire effectively. With the inability to meet in-person and other physical constraints, a referral program might be a great idea for hiring great employees while saving costs. Also, if you have a busy hiring team, employee referrals can reduce your hiring time.
Recruiters can leverage the candidate’s professional network and reel in new talents. By implementing a referral program, you can get your employees invested in the recruitment process. So, employees that are hired through referrals are not only skilled but also are less likely to leave.
The Bottom Line
Reducing the hiring budget and that’s why the cost-per-hire always has been a priority for hiring managers. However, the truth is that hiring great employees on a restricted budget can be a very difficult task. These tips and tricks of reducing cost per hire can save you from bearing the cost of bad hires and rehiring.
Having said that, here at Recooty we’re always here to lend you a helping hand with your hiring strategies. We offer extremely affordable packages with top-notch features that can boost your hiring process. Happy hiring! 🙂