Why Cost Per Hire is the Number 1 Metric You Should Be Tracking in Your HR (and How to Lower it)

April 10, 2019 3:57 pm

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Face it. One of the #1 stress factors of an HR professional that is doing recruitment is to reduce the cost per hire.

The cost per hire metrics is used to measure how much it costs an organization to recruit new employees.

Here’s how you can calculate your cost per hire:

This metric takes into consideration the full amount spent on looking for and recruiting perfect job candidates.

Why Cost Per Hire is a Favorite and #1 Recruiting Metric?

A key reason: You can compare the annual cost per hire over several years to spot any significant changes.

With a manpower projection plan in place, organisation must understand that every hire is unique, and as a result, the approach to hiring must be exclusive too. Measuring every cost per hire should provide you with a projection on the amount you will incur on recruiting the best candidates.

In addition, it acts as a bridge between recruitment efforts and cost savings for your company. These metrics assist in ensuring that your recruiting attempts are realistic for your company, and also targeted to the location that you are in.

Key performance indicators and metrics are significant to the success of an organization. Tracking how much a recruitment team is incurring in the course of the recruitment process is the only way they can establish a proper budget for recruiting employees.

How to Lower Cost Per Hire?

1) Automating the recruiting process

In the market, recruitment software with features and advantages allows your recruitment process to be highly effective, and streamlined and in turns, lowering your recruitment costs.  With the software, processes like surfacing the candidates from the candidate pool to onboarding the candidate will be fully automated.

2) Carry out Multiple Interviews

Doing group interviews with candidates simultaneously is a smart way to save your company huge money and precious time. In fact, before the group interview is carried out, a video interview process could be implemented to filter out unsuitable candidates, so as to speed up the process.

3) Consider Outsourcing of Recruitment Process

Outsourcing your hiring process for different roles can help you save both time and money. By outsourcing your processes, candidates will be filtered and the quality of the candidates shortlisted will be more suitable for the role. 

This will be a load lifted off the shoulders of the HR professional that is doing the hiring as the stress will be passed on to the company that is handling the outsourcing instead! The additional hours saved from the tedious process of hiring could be used to focus on higher-value adding tasks now!

4) Use of Free Job Portals or Sites

As external recruiting cost is a factor which contributes to the cost of hire, free job boards and job posting websites in the market are available to let you post your job vacancies without paying a dime!

These sites in turns contributed to lowering recruiting costs.

5) Have a Talent Pool

Having a pool of interested and qualified applicants will lower your cost per hire as both the internal and external recruiting cost will be largely lowered. All the HR professional has to do whenever there is an opening is to blast the positions to candidates that are interested! This will bypass the external recruiting platform like external jobs portal which they might need to pay for the usage.

With that, how is your current cost per hire like? What is your manpower projection like? What are your plans for lowering it?

If your answer to the questions is “I am not sure” or “I don’t know”, speak to us today! (:

Payboy is a highly versatile and mobile Human Resources Management System that gets things done anywhere, anytime. We offer integrated solutions that will help you prevent your employees from being burnt out. Check out our Recruitment Process Outsourcing Service which gives you only the best candidates today!  

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