Measuring cost per hire is key practice for measuring the efficiency of any recruiting organization. When it comes to evaluating the success of your recruitment marketing strategies and technologies, you should have a good handle on cost per hire (CPH).
The main difficulty in measuring CPH in any organization is that your hires are typically memorialized in your applicant tracking system but all the activities you undertake to acquire candidates take place in other systems.
Typically your advertising expenditures and results are logged with your media partners or your job distribution system (or both). Your sourcing costs and results are tracked with social networks or resume databases like LinkedIn or Careerbuilder.
If you have a recruitment marketing platform, then you have a decent shot at wrapping all those costs and results together in order to optimize CPH, but you have to make sure that your recruitment marketing platform integrates with your ATS. Otherwise, it's extremely time intensive to map your hires back to your talent acquisition sources and programs.
Calculating Cost per Hire
Cost per hire is calculated by dividing the number of hires for a given period by your corresponding recruiting budget.
In order to understand how recruitment marketing optimizes your CPH, you need to understand some foundational recruitment marketing strategies. The first and most important being candidate relationship management (recruiting CRM) and your talent pool.
You can look here for refreshers on CRM and talent pools, but the gist of the approach is to centralize all your past applicants, talent network members, job alert registrants, past career fair/event attendees, etc. into a proprietary database designed to be highly searchable for sourcing and building long term relationships with top talent.
With a proprietary talent pool contained in a CRM system that is synced with your ATS, you have the basis of dramatically reducing your cost per hire. The name of the game is to funnel every new applicant, every new event attendee, every new emailed resume, etc. into this talent pool. Then segment it by your strategic job families.
Whether they be high volume jobs that you are always recruiting for, or specialized positions that are hard to fill, or other types of roles that are key to your success, these segments allow you to pipeline candidates against them. Simply run searches for candidates that fit these strategic families and assign the results to the appropriate pipeline.
As your talent pool grows, and you identify the best fit talent within it, you become less reliant on the very sources that funnel into it.
Putting CRM, and a growing proprietary talent pool, at the center of your recruitment marketing efforts, opens the door for reducing CPH in a number of ways:
- As your talent pool grows and becomes your #1 source of hire, you spend less on other paid sources like job ads, etc, reducing CPH.
- As you share this effective source of candidates across all your recruiters, you leverage the value of those candidates against more open positions. And you reduce the time recruiters spend sourcing candidates.
- With your candidates centralized, you won't pay twice for the same candidate. Agency submissions and database downloads can be automatically rejected if you already have the candidate in your CRM.
- With a growing, pre-qualified pool of candidates always at the ready, you'll increase your quality of hire and reduce turn over costs.
These are just some of the ways that recruitment marketing strategies and technologies can reduce your cost per hire. If you are interested in learning more about how to translate recruitment marketing strategies and technologies into dollars and cents return on investment, check out Talemetry's free eBook: The Recruitment Marketing ROI Handbook.
- REcruiting, REmarketing, and REtargeting
- Recruitment Marketing's BIG IMPACT on Hiring Metrics
- Measuring Quality of Hire for Recruitment Marketing ROI
- Global Recruitment Marketing Software is Different