When the pace of hiring slows, managers are often looking to cut costs by targeting recruitment. However, HR professionals are well aware that reducing resources in this area, without taking into account the organization's strategy and priorities, can prove counter-productive. At a time when budget cuts are frequent, as they are now, the role of HR is to provide decision-makers with all the information they need to make effective, well-informed decisions.
So I'd like to explore with you the concept of cost per hire, an indicator you should have on your HR dashboard in these uncertain times. The fact remains that it's not necessarily an easy indicator to calculate, but one that's very important in a period of budgetary restraint.
Breaking down the cost of hiring
The cost of hiring conceals a certain complexity beneath a seemingly simple indicator. It encompasses all the costs associated with recruitment, including job advertisements, recruiter salaries, recruitment technologies, interview costs and much more. It is obtained by dividing the sum of these expenses by the number of employees recruited for the period analyzed.
The HR Barometer data show that organizations spend an average of $5994 per hire , across all sectors. The highest spenders (75th percentile) reach $8475 or more, while those in the 25th percentile limit their spending to $3513 or less.
Interpreting the cost of hiring
The cost of hiring varies according to a number of internal and external factors, such as sector of activity, geographic location, and the positions and functions sought. For example, recruiting a vice-president of sales will cost much more than hiring an employee for a receptionist position.
These nuances are essential for discussing the cost of hiring with management, and offering them a more detailed and strategic vision.
Monitor hiring costs alongside other measures
For a balanced approach, it's crucial to analyze the cost of hiring alongside complementary measures such as:
Quality of hire indicators: candidate and manager satisfaction, new employee performance and retention.
Recruitment lead times: time to fill a position or to hire.
Number of vacant days in key positions: number of days in an empty chair that can be converted into the cost of an empty chair.
By balancing these indicators, you avoid cutting hiring costs at the expense of quality. Excessive cost-cutting could result in high employee turnover, due to a failure to recruit the right talent.
Valuing ongoing investment in recruitment
Managers don't always have time to think about the intricacies of recruitment. This is an opportunity for HR: explaining the importance of ongoing investment in this area reinforces not only the recruitment budget, but also HR's position as an essential strategic partner.
How can you convince people not to cut your cost per hire too much?
1. Preserve your competitive edge in the talent market
Cutting your recruitment budget may seem like a good idea in the short term, but it may actually reduce your ability to attract the best talent. Maintaining a skilled and active team of recruiters, even in a downturn, is essential to respond quickly to future needs. The relationships built by your recruiters are a strategic asset that no technology can replace.
2. Ensuring sustainable efficiency
Frequent cuts in the recruitment budget generate long-term costs: recruiter turnover, expenses related to redundancies, and time spent recruiting and training new members. Maintaining a stable base of recruitment expenditure, as well as a core team, promotes long-term efficiency.
3. Strengthen the candidate experience
The employee experience begins as soon as a candidate discovers a job offer. Technological tools, such as artificial intelligence and virtual assistants, can personalize interactions and enhance the employer's image. Investing in these technologies, rather than abandoning them, is crucial to attracting and retaining talent.
Points to remember
Recruitment is a complex activity requiring a strategic approach and constant investment. By clearly explaining the value of cost per hire and its links to priorities such as efficiency, candidate experience and market competitiveness, you help build a strong argument for preserving and optimizing your recruitment budget.
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