4 Effective Strategies to Reduce Your Cost-per-Hire
Recruiters are always on their toes when it comes to calculating cost-per-hire. This metric plays a crucial role in deciding the overall recruiting budget a company will allocate to their recruiting activities. Also, it gives insight into what’s working for them and what’s not and how they can further formulate their recruiting strategies to perform better.
- What is Cost-Per-Hire?
- How to Calculate Cost-Per-Hire?
- What are the Strategies to Reduce Cost-Per-Hire?
What is Cost-Per-Hire?
Cost-per-hire is the spend you do to fill an open position. By analyzing this metric you get insight into employee hiring spending which further helps to optimize and improve the future hiring strategies and budget.
According to the SHRM report, the average cost per hire amounts to $4,425 and executive hire amounts to $14,936. However, it may vary depending on a variety of factors including,
- Company size
- Hiring volume
- Industry and more….
How to Calculate Cost per Hire?
According to the American National Standard, cost-per-hire is a ratio of the total amount spent to the total number of hires in a specified period.
Here, external costs cover spending on all things that are outside the organization like third-party recruiting agencies, advertising costs, job fair cost, and travel cost. The internal costs comprise internal staffing resources and staffing costs such as the complete salary, benefits, and fixed costs that include physical infrastructure (talent acquisition system costs, etc.).
Four Strategies to Reduce Cost-per-Hire
By now you must have tried every trick in the book to optimize your recruiting cost. But with changing times and trends, you need to constantly revamp your approach so that you’re not wasting your time, money, and resources on redundant strategies. Here we bring you four such effective cost-saving strategies that are sure to bring your overall cost-per-hire to a minimum.
1. Opt for Free Job Boards
Free job boards are a great cost-saving option when you want to reduce cost-to-hire metrics. These job boards do not charge a hefty amount and provide all the required job posting features. Besides, they have a broad reach when compared to paid job boards which help to multiply the hiring speed.
Indeed, Glassdoor, Jora, LinkedIn, and Google for Jobs are some of the many free job board options available on the internet. For free freelance opportunities, you can post on FlexJobs, Upwork, Indeed, and Freelancer.
2. Create Referral Programs
A study from Deloitte compared the retention rates of employees over three years. Those hired through employee referral programs had a retention rate of 42% as opposed to 32% for employees hired through job boards and 14% percent for career site hires.
There’s no denying the fact that referral programs bring quality talent into the company at a low cost. And these talents tend to stay longer and work better than a completely new hire with no reference. Investing in referral programs may seem like a huge investment, initially. But in the long run, having a permanent and performing employee-only adds to your returns.
Thus, you must build a comprehensive referral program that offers great bonuses and attracts quality and referral candidates in your organization. By leveraging your employee’s network, you get access to active as well as passive talent without much cost or money investment.
Read More: Calculate Cost of Employee Turnover
3. Use Smart Candidate Sourcing
Sorting through thousands of resumes just to know that none of them fits your requirement is a waste of time, effort, and money. You can avoid any such situation by wisely starting your sourcing journey on the right channels. To start, you can pick any of the below sourcing methods to channel your candidate search in the right direction.
Social Media Sourcing
Go beyond traditional job portals and look for talent on social media. You can pick LinkedIn, Facebook, Twitter, etc. to look for people with a matching skill set. The labyrinth of profiles gives you access to a never-ending range of diverse professionals. Moreover, social media also allows you to run job advertisements in the most engaging way possible.
You can run video or images in your job ads and attract to build a unique brand image. This uniqueness further helps you attract the right candidates without demanding hefty money for the same. Also, social media ads can further be targeted to a particular section of the audience who are more relevant to your search and are likely to revert. This targeted approach cuts down on any additional advertising and provides maximum output in a minimal amount of time.
Programmatic job advertising is using technology to buy, place, and optimize job ads. Unlike popular job boards, it places ads all over the internet and widens the ad reach. The process to run a programmatic ad is quite simple. You look for a software that provides an automated system for purchasing space to advertise your job opening, then you specify the details of your target demographic and then you list how many prospects you want to reach.
4. Automate Your Process
Automate your everyday tasks to optimize your recruiting costs. Especially, if you are planning to scale your recruiting efforts. Automation empowers recruiters to go beyond ordinary and deliver maximum results in minimal time. Apart from saving costs, it provides a quality candidate experience and improves the quality of hire. Here is a list of things that you can easily automate with software available in the market.
- Applicant Tracking
- Interview Scheduling
- Skill Assessment
- Background Checks
- Candidate Sourcing
- Candidate Engagement and Nurturing
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