Do you know your cost per hire (CPH)?
Knowing this figure can help you make better strategic decisions and save your company money in the long run. An average employer in the USA spends $30,000 to fill a new position.
No new hire comes for free, unfortunately, but there are strategies you can use to reduce your unavoidable hiring costs.
Cost-Per-Hire (CPH) is a timely topic for Recruitment Organization, many of whom are under pressure to deliver better quality of hires with fewer resources. The amount of specialized roles that need to be filled is increasing but the applicant volume keeps decreasing as we’re on the edge of the biggest candidate shortage yet.
Good news is that by measuring the right volume of data, you can gain control over your recruitment process to develop strategies that increase the quality of your hires while saving money.
How to Reduce Cost per Hire
There are several different methods that can lead to reduction of Cost per Hire (CPH). Below is the list of strategies that you can choose from to reduce the costs.
Build a Talent Community
Often candidates are hard-to-find, are also unwilling to leave their current job, but this may change one day. As 75% of the people you want to hire aren’t looking for job change – they are passive candidates. The key here is to grab their attention and sustain it in order to build a pool of passive candidates. Building and maintaining a pipeline of interested, qualified candidates can do wonders for your cost per hire.
Digitization and automation of recruitment process
Using free online tools, professional HR technology and AI to improve recruitment process and reduce their costs is quickly becoming a new norm of your peers in the HR sector. Streaming and automating of the activities can be achieved through implementing the right tools.
What’s more, simple solutions such As., Social media is free and widely popular, so it can help you connect with more job seekers without costing you a penny. Verifying its ability to connect you with quality candidates. To effectively leverage social media, first ensure that your social profiles share your employment story and encourage job seekers to learn more. Then use social media tools like Facebook’s Graph Search or Twitter’s search engine to start sourcing the talent you need.
Take advantage of free job boards
Posting your job ads on some of the most popular job boards is expensive these days. For example, to post a job on Monster you need to spend $375 per month. To post one job per month on Career Builder you’ll need $199. And a single post on Dice will cost you $250 per month.
What most employers don’t know though is that the two of the first three most popular job boards with the highest traffic offer employers a possibility to post their jobs for free.
You can post your job on Indeed, LinkedIn which is visited by 200 million unique visitors each month.
There are many other free job boards you can take advantage of to reduce your cost-per-hire. One of them is Jora, Angel List, Flex Jobs, where you can post your jobs by filling in a short form (no registration required).
Launch a Corporate Career Site
Because a career site can advertise your jobs and employment brand 24/7, it allows you to reach substantially more candidates for a very reasonable cost. Career sites have also been one of the top internal sources of hire for several years in a row—proving that they can attract quality candidates. In other words, a career site can help you find the right candidates faster and more affordably. As a result, you can spend less money on more expensive recruiting tactics like job advertisements or career fairs. If you already have a career site and it isn’t generating this outcome for you, request a free career site evaluation so you can get the results you want.
As you test out these recruiting tools, remember that every company is unique and the results that these tools produce vary. But if you measure and track each tool’s effectiveness, you can learn which ones are the most cost-effective for your organization. In return, you will reduce your cost per hire while still hiring some of the best job seekers out there.
Create Referral Programs
The average cost-per-hire is $4,129 according to SHRM data, and the average time-to-fill is about 42 days. Your employees already understand the kind of work ethic and attitude it takes to succeed in your workforce. By engaging your already-employed talent to refer friends, family, classmates, and colleagues, you can reduce hiring costs and time while sourcing from a ready talent pool. If you want to bring down costs even more, you can get creative with your referral incentives instead of the typical practice of offering a bonus. Providing special recognition, discounts, prize drawings, and non-cash rewards such as a free parking spot or extra PTO can also motivate employees to make referrals.
Employee referrals are a critical tool for finding new hires. In a 2015 Silk Road study, employee referrals produced more hires than any other source studied. The best part is that you don’t need to invest in an expensive employee referral program to get more referrals. By strengthening your employment brand, your employees will encourage others to apply without even being paid to do so. For more details and tips, read The Secret Strategy for Increasing Employee Referrals.
Reduce the need to recruit in the first place
The final way to cut hiring costs seems simple on the surface, but might turn out to be a complex project; improving the way you support and engage with your existing employees should help to reduce turnover, so there’ll be less need to hire replacements for staff that leave.
Refining your recruitment processes will also help to improve the quality of your hire, which again should lead to higher staff retention rates
It’s clear that outsourcing recruitment offers various opportunities for bringing down costs associated with different aspects of human resources management. Choosing to rely on the expertise of an external provider, organizations can efficiently manage their recruitment resources and further optimize their processes.
As a Customized RPO leaders in the recruitment industry, We at Pragna were able to help organizations considerably bring down the Cost-per-hire. We calculate these costs on the basis of hiring history and optimize recruitment processes to render our clients more efficient and less wasteful.