What is Cost per Hire?
Cost per Hire is a metric that calculates the average expense incurred in hiring a new employee. It includes all costs associated with recruitment, such as advertising, recruiter fees, interview expenses, and onboarding costs. This metric is crucial for understanding the financial efficiency of your recruitment process.
How to Measure Cost per Hire?
Cost per Hire is measured by:
Total Recruitment Costs: Sum up all the expenses related to recruiting, including job board fees, recruitment agency fees, internal recruitment team salaries, and costs associated with the number of open positions.
Number of Hires: Divide the total recruitment costs by the number of hires made in a specific period.
HR Software: Use HR software or tools like BambooHR or Workday to automatically track and calculate cost per hire.
How to Improve Cost per Hire?
To reduce cost per hire:
Optimize Recruitment Channels: Focus on the most cost-effective recruitment channels that yield high-quality candidates.
Leverage Employee Referrals: Implement or enhance an employee referral program to reduce reliance on expensive recruitment agencies.
Use Technology: Automate parts of the recruitment process with ATS and AI-driven tools to reduce manual effort and associated costs.
Enhance Employer Branding: Build a strong employer brand to attract more qualified candidates organically, reducing the need for extensive paid advertising.