5 Ways of Reducing your Hiring Costs

In an era of economic crisis and resource optimization, organizations are focused on finding the best ways to utilize time and cost to get the best results. Every employer wants to find shortcuts on the treasure map to find the best candidates quickly! Let’s take a look at metrics that help to carve out an effective recruiting process!

The importance of Recruitment Metrics

Recruiting metrics provide employers with valuable data to build the most effective recruitment strategies! With accurate recruiting metrics, companies can find patterns and make informed decisions to discover the hidden talent that can contribute to the company’s success.  

Metrics like time-to-hire help companies gauge how much time it takes for them to fill a position, and based on that data, streamline their process to fill vacant positions faster. Similarly, another important recruiting metric is the cost-per-hire which focuses on optimizing monetary resources used for recruiting new candidates.

Essentially, they are like a GPS for finding the right candidates with minimal resources!

What is Cost-Per-Hire

Cost per hire (CPH) is a recruiting metric that determines the total cost of your recruitment process against the number of candidates hired during a specific hiring cycle. The right CPH helps companies visualize and control their resource consumption whilst maintaining the quality of the hires.  

CPH constitutes all the expenses of the recruiting process, including advertising, referrals, and interviews. In case your organization has a limited budget, it helps identify areas where you can cut down the cost and determine which parts of the recruitment process are consuming the most resources.  

The Magic Formula

So, how do we calculate the hiring cost? First, to compute the cost-per-hire, you need to include all the expenses of your recruitment process. They can include:

• Employee Referrals: In case you have an ERS in place, for every applicant you hire through an employee referral, you have to account for the bonus awarded to the referee.  
• Advertisements: The cost of job ads on job boards, social media, or websites.
• Job fairs: Expenses incurred for setting up stalls, distributing flyers and merchandise, and travel costs.
• Assessments: Any fee paid for a technical assessment, personality test, background checks, and other screening tests.
• Interviews: Food, venue, and travel expenses for the applicants and the interviewers.

After summing up the total cost, to calculate the CPH, divide it by the number of applicants hired.

Cost-per-hire = (Total Recruitment Cost) / (Number of new hires)

While calculating your recruitment cost, it’s important to note that your data is collected over one hiring cycle to obtain accurate results.

5 Ways for Reducing your Hiring Costs

Based on the current economic crisis in Pakistan, numerous organizations are looking to cut down costs. Around 15% of the HR expenses are attributed to hiring new people and optimizing the cost-per-hire can significantly improve profitability.  

Here are some ways you can reduce the cost of hiring!

Maintain a Talent Pool

One of the best methods of reducing hiring expenses, and also ensuring that you remain connected with talented people, is to create a talent pool. In each hiring cycle, there are only limited open job roles and oftentimes, you come across promising candidates that make it to the final stages of your hiring pipeline.  

Even though these candidates don’t make the final cut, they can be valuable assets for your company in the future. You might want to stay connected and communicate with them so that whenever a new opportunity opens up, you have a bunch of enthusiastic, talented applicants to hire from.  

When hiring applicants from a talent pool, there are many recruitment processes that you don’t need to repeat such as screening, assessments, personality tests, and background checks. You already know them pretty well and after one interview, you can hire them!

Build an Employee Referral System

According to a survey by Jobvite, applicants referred through an ERS are 4 times more likely to be employed! Employee referrals are a successful recruitment tool since the applicants referred are often better suited for the job and have the required skills. It also eliminates the need for advertising and reduces the time-to-hire significantly.  

Read more about employee referrals here.

Create an Engaging Careers Website

Careers websites are a great way for building your employer brand and posting updates on job vacancies. They are a valuable investment and a great tool for recruiting talent. Maintaining your careers website ensures that applicants can apply for the right position with ease. It reduces the cost-per-hire by removing the need for investing in advertisements and job fairs.

Read why is it important to create a great careers website/careers page.

Streamline your Hiring Process

A good hiring process ensures that you hire quality candidates with minimum time and cost. If you have an extensive hiring process with multiple stages, it will take more time, thereby increasing your time-to-hire. Not only does this consume more cost, but in case of an unexpected vacancy, you will have to find a temporary replacement until another applicant is hired.  

By automating your hiring process and optimizing your recruiting metrics, you can save significant resources! One way to put this into practice is to use an Applicant Tracking System and manage the influx of resumes, schedule interviews, track candidate progress and maintain a talent pool.

Utilize Social Media

Social media platforms are proving to be an effective tool for marketing, building your employer brand, and scouting talent! A large number of job seekers apply for new positions through LinkedIn and Facebook. If your company has a presence on social media platforms, it keeps job seekers updated on any upcoming job openings.  

Moreover, it is very useful for building a good reputation and providing insight into your organization’s culture and practices. Companies that post interesting videos about recreational activities and blog posts highlighting their goals, upcoming projects, and achievements are more likely to attract candidates.  

Social media recruitment also allows employers to scout talented applicants and delve into passive recruitment. Employers can stay in touch with promising former applicants and build a virtual network.

Conclusion

Understanding and optimizing your company’s recruiting metrics paves the way for a stronger recruitment strategy! Knowing your CPH can help you make informed decisions on where to allocate resources and create a more efficient hiring process. This aids your company in improving its profitability and increasing its return on investment!

Follow these guidelines to improve your CPH and hire top talent!