As businesses strive to attract and retain top talent, it’s essential to keep an eye on the cost per hire metric. Not only is this a critical recruiting metric, but it also provides insight into the overall efficiency and effectiveness of your hiring process. Here’s why cost per hire is so important, and how you can measure it:
Why is Cost per Hire important?
Cost per hire measures the total cost of attracting and hiring a new employee. It’s essential to track this metric to ensure that the recruiting process is cost-effective and efficient. By analyzing the cost per hire, you can identify areas where you can reduce costs, streamline processes, and optimize your recruiting efforts.
Measuring Cost per Hire
Measuring cost per hire is relatively straightforward. To calculate your cost per hire, you need to add up all of the costs associated with attracting and hiring a new employee. This includes things like:
Advertising and marketing expenses
Recruitment agency fees
Job board fees
Background checks and other screening costs
Employee referral bonuses
Travel expenses for candidates and recruiters
Once you’ve added up all of these costs, divide the total by the number of new hires. This will give you your cost per hire.
Interpreting the Results
Once you have calculated your cost per hire, you can compare it to industry benchmarks to see how your company stacks up. The Society for Human Resource Management (SHRM) reports that the average cost per hire is $4,129. However, this number can vary widely depending on the industry, company size, and the type of position being filled.
If your cost per hire is higher than the industry average, you may need to re-evaluate your recruiting strategy to find ways to reduce costs. This could include using more cost-effective recruiting methods or working to improve the efficiency of your recruiting process. If your cost per hire is lower than the industry average, congratulations! This suggests that your recruiting efforts are efficient and cost-effective.
In conclusion, tracking cost per hire is a crucial recruiting metric that can help you optimize your recruiting process, reduce costs, and attract top talent. By measuring this metric and comparing it to industry benchmarks, you can identify areas for improvement and work to make your recruiting efforts more effective.