There is More to Cost Per Hire Than Meets the Eye

The award for 2023 recruiting metric of the year goes to….(insert tense anticipation here)...Cost-Per-Hire! (Cue the applause). Yes, Cost-Per-Hire - aka CPH has finally won the hearts of recruiting leaders everywhere. After years of escalating recruiting costs, many employers have a CPH measuring at a 10 or even 20-year low. This metric, once hidden deep in the back of talent acquisition executive summaries, is now front and center for all to see.? While some may be taking this opportunity to garner fame and fortune or to intimidate the competition, recruiting leaders far and wide are enjoying an uncommon season of peak performance.

In this week’s The Monday Minute , I will clear up some of the confusion around CPH (Cost-Per-Hire)while giving you a better understanding of how to measure it effectively.

CPH comes in Many Shapes and sizes

There are a multitude of reasons to measure CPH, and just as many ways to measure it. I find the easiest way to avoid confusion is to give your CPH measurement a name that reflects it's purpose. Here are some examples of clearly named CPH's along with their purpose:

Advertising CPH – The average amount of advertising dollars spent per hire. This can be measured granularly by specific role, location, recruiter, etc. to root out opportunities for improvement or gaps in your proccess. Advertising CPH is often used to allocate the minimum budget needed to reach specific hiring goals. Remember to Include all advertising and ad production expenses.

Recruiter/Sourcer CPH - The average recruiter and/or sourcer expenses (labor, benefits, equipment, training, travel, etc) incurred per hire. This is most commonly used to determine the headcount required to reach specific hiring goals.

Recruiting Department CPH - By taking the departmental budget and dividing it by the number of hires, it is possible to estimate the department budget needed to hit specific hiring goals. Remember to include qualification, onboarding, and orientation expenses if they are part of your budget.???

Total Actual CPH - While this can vary from company to company or between industries, it typically includes all expenses that can be associated with a hire? (training, equipment, recruiting, advertising, travel, relocation, screening, testing, interviews, etc.). This gives a more accurate account of what the true CPH is for an organization. By pairing Cost-Per Hire with the total cost of employee attrition, executive teams can accurately forecast the impact of talent acquisition on financial performance, and be equipped to make critical decisions that result in positive talent outcomes.

By pairing Cost-Per Hire with the total cost of employee attrition, executive teams can accurately forecast the impact of talent acquisition on financial performance, and be equipped to make critical decisions that result in positive talent outcomes.

If you are enjoying record low CPH, relish this moment, but be warned. History has shown recruiting trends to seldom last longer than a year or two. Do not grow complacent, and always prepare for what's to come.

Getting Your Cost-Per-Hire Under Control

While measuring cost-per-hire is certainly important, learning how to reduce and control your Cost-Per-Hire is even more essential. Stay tuned for the next edition of The Monday Minute where I will be sharing ways you can dramatically reduce your Cost-Per-Hire. You won’t want to miss it, so subscribe now!

If you want to dive deeper into this or other recruiting topics, just drop me a message, or schedule some time to chat. As always please remember to like, comment, and share The Monday Minute with your co-workers and friends. Have a great week in recruiting and retention!