Hiring a new employee is expensive; hiring a large number of workers can be budget-busting. Most companies know this, but the actual figures can be nonetheless daunting. According to the Society of Human Resource Management, the average cost per hire is a whopping $4,129. In other words, if you have an opening to be urgently filled, expect to pay at least $4K to find the right person—and then cross your fingers that the right person was hired, because otherwise, you might be shelling out another $4K to find another replacement …
Cost per hire isn’t the only concern for hiring departments; time per hire is also a big concern, especially for organizations and industries with seasonal requirements or naturally high turnover. Decreasing both metrics is key to not only saving money, but also improving the quality of hires.
Here’s a basic plan for achieving those reductions:
A Look at the Metrics
Cost per hire and time per hire are internal metrics that reflect and measure the effectiveness of your recruiting efforts. The bigger the number with these metrics, the more work it’s taking to hire employees. Remember, cost per hire isn’t the direct costs of hiring just one worker, but the overall expense to attract, recruit, interview, vet, and onboard a number of candidates during the process. If you spent $50,000 and recruited 50 job-seekers for 10 open positions, but hired just 10, your cost per hire is $5,000. Obviously, the more candidates and applicants, the better—you draw from a better pool and can be more selective on who you vet, which in turn should reduce time per hire (also known as time to fill, which, according to SHRM, is currently averaging 42 days).
Over time, these metrics can stagnate or creep upward. Often, this happens because hiring departments focus too much on requirements (“We need X amount of hires in X amount of time.”) and not enough on the people they are hiring. Internal metrics are important, but when companies start treating applicants like numbers—even before hire—recruiting suffers, thus resulting in more expense and more time to hire.
A Holistic Approach
Part of the problem for many companies struggling with cost and time per hire is that the elements of their hiring processes are too disparate. Often, a traditional funnel is in play: A candidate sees or is sent a job posting, applies, is or is not chosen for an interview, and is or is not hired and onboarded. Unfortunately, many potential good hires are lost along the way with this process, and recruiters find themselves starting from scratch if an applicant turns them down or doesn’t work out.
A holistic approach is much more effective at not only reducing cost per hire, but also improving the quality of those hires. By holistic, we mean that every step of recruitment marketing is connected to each other in some way; each element builds upon itself and the rest of the candidate’s journey (more on that in a moment). For example, social advertising might reach job-seekers at both an awareness and an interest phase in the process. Career websites appeal to candidates who are interested, are considering applying, or have applied. A CRM system carries individuals from intent, through evaluation, to (hopefully) a job offer.
Best-in-class organizations are eliminating the traditional funnel and replacing it with this holistic, interconnected philosophy. Job seekers who might not be ready to apply remain on recruiters’ radar (and vice versa). Qualified applicants may not be hired right away but remain part of the process. Candidates get the information they need about openings through multiple channels. This holistic strategy goes a long way at bringing down cost and time per hire, yet does so without sacrificing quality of hire.
Provide the Right Journey
By adopting a holistic approach to recruiting, job seekers, candidates, applicants, and hires embark on a journey rather than endure a process. Some strategies in providing this journey, which expediently and efficiently moves candidates from Point A (source/engage) to Point B (nurture/hire) —and, ideally, a Point C (hello advocacy!) at which new hires evolve into engaged, productive employees—include:
- Branding, social media, and distribution: Attracting the right candidates from the start is essential for keeping cost of hire down and filling positions in less time. Branding creates an image and a message of your company that you want to project to candidates in order to, hopefully, increase their interest in working for you. In the omni-channel world of 2016, a strong social media presence is almost mandatory, not only to highlight your brand and announce openings, but also to interact with your potential job pool. Finally, employers must be smart about distribution, posting jobs as efficiently and far-reaching as possible.
- A la carte is key: Not every recruiting strategy will work for every company; therefore, choose the tools that make the most sense for you and your recruiting goals. A la carte options allow you to use the approaches that appeal to your targeted demographic—and you pay only for the tools you employ, thus reducing cost per hire even more.
- Create evangelists: If you are able to impress hires all along the process—including into their first days and weeks of employment—they will be more likely to sing your praises to others, including on the social media channels you have established. This increases the quality of your hiring pool and, again, cuts into cost your hire because these instant evangelists are touting you for free.
Mapping the hiring journey and ultimately focusing on candidates’ experience through that journey produces better applications, more enthusiastic applicants - leading to more productive and engaged employees and brand advocates. The results will shine through in your program outcomes and recruiting metrics, including cost per hire and time per hire.
How concerned are you with cost per hire?