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Recruiting and hiring new talent is a critical process for any organization, but it is also financially demanding. Determining your cost per hire is crucial to understanding the financial impact of your recruitment efforts and optimizing your hiring strategies. The formula most commonly used to calculate your cost per hire is Internal & External Recruiting Costs divided by Total Number of Hires. In this blog post, we will delve into the key factors involved in calculating your cost per hire and take a look at how hiring events can decrease your recruitment costs.
1. Understand the Components of Cost per Hire
Cost per hire comprises both internal and external expenses. Internal costs include salaries, benefits, and training of your recruitment team, as well as any technology or recruitment tools you use. External costs consist of fees paid to external recruitment agencies, advertising expenses, background checks, assessments, and other external services. It’s worth evaluating your tech stack to find areas to consolidate and save on costs. For instance, Brazen customers use just one platform to host virtual hiring events, manage in-person recruiting events, connect with candidates via chatbots and automate follow-ups as well as to source, screen and interview candidates.
2. Track Your Recruitment Expenses
To determine your cost per hire, start by tracking and recording all relevant recruitment expenses. Create a comprehensive list that covers both internal and external costs. Consider using spreadsheets to streamline this process and ensure accuracy.
3. Calculate Internal Costs
Calculate the internal costs by adding up the salaries, benefits, and training expenses of your recruitment team members. Include any technology or recruitment software costs, such as applicant tracking systems or job posting platforms. Divide the total by the number of hires within a specific time period to obtain the average internal cost per hire.
4. Evaluate External Costs
For external costs, sum up the fees paid to recruitment agencies, advertising expenses, background checks, and any other external services utilized during the hiring process. Divide this total by the number of hires to obtain the average external cost per hire.
5. Consider How Time-to-Fill Impacts Cost per Hire
The time it takes to fill a position impacts your cost per hire. Longer hiring processes often result in increased costs due to extended job advertisements, additional recruitment team efforts, and potential productivity loss from vacant positions. Analyze your time-to-fill metrics and factor in associated costs to gain a more accurate picture of your overall cost per hire.
6. Assess Quality of Hire
While cost is important, it's equally crucial to evaluate the quality of the candidates you hire. Higher-quality candidates may command higher recruitment expenses upfront but can lead to improved long-term outcomes, reduced turnover, and increased productivity. Assess the performance and retention rates of your hires to determine the impact of quality on your cost per hire.
7. Benchmark & Track Continuous Improvement
Compare your cost per hire against industry benchmarks to gauge your organization's performance. Industry-specific data can provide valuable insights into how your recruitment expenses measure up to similar organizations. Continuously monitor and refine your recruitment processes to optimize efficiency and reduce costs over time.
How do Brazen Hiring Events Reduce Your Cost per Hire?
Hiring events can be an effective strategy to reduce your cost per hire in several ways:
1. Economies of Scale: Hiring events typically involve attracting a large number of job seekers to a single location or virtual platform. By consolidating the hiring process into a single event, you can benefit from economies of scale. This means that the cost per candidate decreases as you can interview and evaluate multiple candidates simultaneously, reducing the overall cost per hire.
2. Targeted Audience: Hiring events allow you to focus on specific job roles or skill sets, attracting candidates who are specifically interested in those positions. This targeted approach reduces the time and effort spent on reviewing applications from candidates who may not be the best fit for your organization. By pre-screening candidates with knock-out registration questions and targeting your marketing efforts with our sourcing marketplace, you can increase the efficiency of your hiring process and reduce costs associated with sifting through unqualified applications.
3. Brand Awareness and Employer Reputation: Hosting or participating in hiring events can help enhance your organization's brand awareness and employer reputation. When candidates have the opportunity to interact with your company representatives directly, they get a firsthand experience of your culture and values. Positive interactions and engaging events can attract top talent and make them more inclined to consider your organization, which can result in a higher quality of candidates and reduce recruitment costs associated with sourcing and attracting talent.
4. Networking Opportunities: Hiring events provide networking opportunities for both recruiters and job seekers. By connecting with potential candidates face-to-face, recruiters can establish relationships, answer questions, and provide valuable information about the company and available positions. This personal connection can create a positive impression and encourage candidates to engage further in the hiring process, potentially reducing recruitment time and costs.
5. Streamlined Selection Process: Hiring events often incorporate various stages of the selection process, such as initial screening, interviews, and assessments, into a single event. This streamlines the hiring process and reduces the need for multiple rounds of interviews or lengthy evaluation procedures. By condensing the hiring process, you can save time and resources, leading to cost savings in terms of recruitment team efforts and associated expenses.
6. Reduced Advertising Costs: Hiring events can serve as a platform to promote your job openings, allowing you to reach a wide audience of potential candidates without incurring significant advertising costs. Instead of investing in individual job postings on various platforms, you can leverage the event's marketing and promotion efforts to attract a pool of qualified candidates for multiple roles, thus reducing advertising expenses.
By leveraging hiring events, you can streamline your recruitment efforts, attract the right candidates, enhance your employer brand, and ultimately reduce your cost per hire. However, it's important to select the right hiring event platform to ensure maximum impact and return on investment.
FAQ Recap: What is cost per hire?
How is cost per hire calculated?
Calculate your cost per hire by using this formula: (Internal & External Recruiting Costs) / Total Number of Hires.
What are internal recruiting costs?
Internal hiring costs include recruiter and talent acquisition team salaries, benefits, and training expenses, as well as any tech or hiring software costs.
What are external recruiting costs?
External hiring costs include recruitment agency fees, employer brand advertising, job board costs, background checks, and any other external services performed during the recruitment process.