Recruiting is expensive. Limited candidate pools and underqualified applicants add two more challenges for hiring managers. Fiscally responsible HR means knowing average costs per hire and identifying ways to reduce recruiting costs.
Cost per hire (CPH) is a standard human resource metric that captures the total cost of hiring and integrating a new employee into your company, including:
Monitoring your CPH helps determine where you can reduce recruiting costs and budget for future projects. Companies also use it as a performance benchmark for their hiring team.
CPH = (Internal Recruiting Costs + External Recruiting Costs)/
Total Number of Hires
Internal Cost Calculations typically include:
External Cost Calculations describe:
Industry , staff size, position level, open roles, and worksite location all influence CPH.
Monitor your CPH to learn the following:
Your hiring process metrics include time to hire, time to fill, interview to ratio offer, quality of hire, and retention rate.
You can generally reduce recruitment costs by looking for quality rather than quantity of candidates. Refine your candidate assessment process. If you look for fewer but more highly qualified candidates, you can cut your job board spending by up to 88%.
You can also reduce hiring costs with automation and online interviews. Eliminating external recruiting agencies and face-to-face meetings, especially if travel's required, can significantly reduce expenses. Instead, attract applicants through social media and employee referrals and use those tools to maintain your talent pool.
If you are in an industry with high turnover or heavy expansion, develop a formal candidate pipeline and monitor it for success. Consider the future, not just today. Make recruiting and hiring part of future project budgets and invest in employee development to keep your current staff up to date.
Leverage employee advocacy. Ask your current employees to share their working experience with your company on social media, such as LinkedIn and Glassdoor, to impress potential talent.
A better way to reduce your recruiting costs is to hire a company like Worca.
Worca prequalifies candidates for multiple levels and positions, capable of hitting the ground running. We're continually building a global database of eligible hires from which we recruit and vet candidates. You don't need to advertise on job boards, work your social media accounts, or rely on your employees to find workers for you.
Professional employer organizations (PEOs) and employers of record (EORs) recruit at scale from top universities worldwide. These organizations have A-list talent ready to help your company grow and succeed. As a result, you no longer need to spend resources on job boards, interviews, or automation to weed through the hundreds of resumes you receive for each opening.
PEOs and EORs also help you with hard-to-find talent. For example, if you cannot fill positions requiring specialized skill sets, a company with a pre-screened database of individuals can streamline your search.
If you wish to hire in another country, EORs relieve you of any responsibility to establish a local entity. The EOR is required to comply with all local laws and regulations; you don’t need a subsidiary. EORs can also help with equipment logistics and take care of onboarding, payroll, benefits, and termination.
In return, you obtain highly qualified employees with the skills you need at a fraction of the cost per hire. A database of pre-screened, qualified candidates seeking work in various industries helps you match open roles–at every level–to applicants quickly.
Worca can reduce your resume-to-hire ratio to 10:1 and increase your retention to 95%. We match recruits with jobs, help you onboard them, and also offer administration services for payroll, benefits, and termination.
When you hire globally, Worca keeps you compliant with each country's requirements and relieves you of the burden of active recruiting. You can also shorten your hiring cycle by starting with a pre-vetted candidate pool. Onboarding takes minutes.
Recruiting is expensive. According to a report from the Society for Human Resources Management, the current average cost per hire is around $4,700. Hiring for a $60,000 position could cost $180,000 or more; choosing the wrong candidate can waste up to 30% of their first-year earnings. Let Worca take on that responsibility so you can immediately access candidates who fit your bill.