Lowering Your Cost Per Hire
Keeping an organization properly staffed with qualified people is important for maximizing any organization’s efficiency. However, the cost of identifying and onboarding new hires can be steep, especially when there is a delayed time-to-fill and a lengthy training process.
Thankfully, there are ways you can lower your cost per hire. The total spend on sourcing, identifying, and onboarding a new employee is attributed to various factors that depend on your sourcing methods, time required to fill the role, and quality of hires. By addressing these areas, you can potentially save money during the hiring process and maximize your chance at obtaining an on-target candidate to fill the role.
So how do you lower your average cost per hire? Here are some strategies to help reduce your cost per hire.
How to Lower Your Cost Per Hire
To lower your cost per hire, you will need to streamline your recruitment process. Depending on your hiring needs, your talent acquisition plan may differ. For instance, hiring c-suite executives can take more time and cost more money on average than recruiting entry-level employees. Also, the higher number of hires you need, the lengthier and costlier the process will be in general.
Overall, there are two categories of costs to reduce: external recruiting costs and internal recruiting costs.
- External recruiting costs involve any costs incurred sourcing, identifying, and engaging with potential candidates outside your company. Every expense you pay outside of your company, such as commission for external recruiters, job board fees, agency fees, background checks, etc.
- Internal recruiting costs involve any costs incurred within your organization that go toward recruiting, such as spend on a referral program and in-house recruiter salaries. Indirect factors that increase total recruiting costs include a long average time to hire, inefficient onboarding process, or frequent candidate drop-off rates that force you to look for candidates all over again.
You can reduce the total cost per hire by optimizing spend in both categories.
5 Ways to Reduce Your Cost Per Hire
1. Optimize Your Recruiting Channels
To lower your recruiting costs, the first thing to explore are all your recruiting channels. Which are actually filling open positions with qualified candidates, and which are dud expenses that can be reduced or eliminated? Whether it’s spend on social media ads, job boards, a referral program, or an external recruiting agency, evaluate which channels have produced on-target candidates and which have not been as effective.
Then, after an audit of your recruiting channels, you can check out more affordable methods to get better results. For instance, if a lot of your external recruiting expenses go toward commissions for a full-service contingency recruitment firm, you can explore using an hourly recruitment research firm instead. This is a good option if you have the ability to call a list of candidates after the research firm sources them. However, if you prefer full-service, you should find ways to cut corners in other areas. For example, if advertising costs for a platform isn’t producing desired results, you can downgrade to a free or standard plan and reassess how it works for you.
2. Streamline the Recruitment Process
During the time period to find and onboard a new hire, your organization operates at lower productivity. Therefore, shortening your time frame to hire can indirectly improve your cost-per-hire metric. Having an efficient applicant screening and interview process can help shorten your time to hire and ultimately reduce your total cost per hire.
Keep a close track of your recruiting metrics to see any weaknesses in your process. Recruitment technology like an applicant tracking systems (ATS) can help you save time by screening resumes and managing applications more efficiently. Also, have your recruitment team implement structured interview processes to speed up decision-making and improve the candidate experience.
Also, it’s important to collect feedback from candidates and hiring managers to refine your staffing formula. Everyone involved can offer valuable insights, such as feedback of job description clarity, or if there were too many interviews or not enough followups.
3. Build a Talent Pipeline
Maintaining a talent pool of previous candidates or those who have shown interest in your company can significantly reduce the time and cost of finding new hires. By keeping a roster of these individuals, you can have a ready-made group to draw from when new positions arise.
To maximize the benefits of a talent pool, it’s essential to engage with potential candidates on an ongoing basis. Regular interaction through newsletters, updates, and recruiting events helps keep your company top-of-mind and fosters a sense of connection, ensuring that these candidates remain interested and informed about opportunities with your organization.
- Don’t have a talent pipeline? You can build and maintain a talent pipeline with Corporate Navigators. We can conduct ongoing recruitment research on your behalf and identify interested and qualified candidates as they become available. Plus, we can continue to reach out to new lists of candidates to verify interest on your behalf through Candidate Development. Having these candidates in your back pocket can reduce the overall cost of hiring since you won’t need to spend more money than you need to.
4. Invest in Your Brand
Qualified candidates want to work full-time with a company that will treat them right. Build up your company’s culture, values, and benefits to attract top talent. Investing in your brand is like planting a vibrant garden; just as flowers attract bees with their color and scent, showcasing your organization’s unique environment and perks draws candidates who align with your vision and values.
To cultivate this interest, it’s crucial to build a strong online presence through effective content marketing, engaging social media activity, and a well-designed careers page. By doing so, you create an inviting and informative space that captures the attention of potential candidates, making them more likely to consider joining your team.
This task is not just important for attracting qualified active candidates, but your brand reputation can compel a passive candidate to join your company with the right offer presented to them.
5. Use a Employee Referral Program
Implementing or enhancing an employee referral program can streamline your hiring process, as employees often recommend candidates who are a better fit and can be onboarded more swiftly. It can also results in a shorter time to fill, lowering the CPH for the entire hiring process.
To maximize the effectiveness of this approach, offering incentives or bonuses for successful referrals serves as a powerful motivator, encouraging greater participation and enthusiasm among your team. By creating a structured and rewarding referral system, you not only tap into your employees’ networks but also enhance the quality and speed of your hiring process.
Why It’s Important to Lower Your Cost Per Hire
Lowering your cost per total number of hires is just a good thing to do for your organization’s overall wellbeing. Here are three benefits.
1. Improved Budget Efficiency
Lowering your cost per hire helps you allocate your recruitment budget more effectively. When you spend less to source candidates, you can either save the difference or invest in other areas of your business, such as employee training or development programs, which can contribute to overall organizational growth.
2. Gain A Competitive Edge
In a competitive job market, being able to hire talented employees at a lower cost can give your company a significant advantage. It allows you to maintain or increase the quality of hires while staying within budget, which is especially beneficial if your recruiting budget is limited.
3. Increased ROI
Lowering recruitment costs generally means you’re getting a better return on investment for your recruitment activities. By optimizing your hiring processes, you can achieve more efficient recruitment outcomes, enabling you to better optimize your organization’s budget.
Lower Your Cost Per Hire
To lower your cost per hire, it’s important to examine your unique hiring needs and make a definitive recruitment plan. Every organization is different, requiring companies to use a combination of methods, such as leveraging data-driven strategies and automation tools.
Across the board, identifying qualified candidates at an efficient cost helps everyone. This is why the hourly recruitment research services offered by Corporate Navigators is a fiscally sound alternative to commission-based recruitment firms. If you’d like to lower your cost per hire and still get quality results, contact us today.
