Do you know your company’s total cost of hiring? Once you are aware of the breakdown of your company’s cost of hiring, you can evaluate how well your process is working, compare your costs to those of other companies, uncover where you are spending the most money and identify areas with room for improvement.
When your recruiting is organized with the help of modern applicant tracking software, you can quickly have critical data at your fingertips, providing you the decision-making information you need to create the most effective hiring process for your company.
Hiring a new employee can cost you thousands of dollars. The cost of hiring is much more than just the cost of placing an ad on a job board. There are costs associated with each aspect of the recruitment and selection processes as well as costs related to the time taken from every involved employee’s schedule.
To find suitable candidates, you need to factor in some or all of the following costs.
Once you’ve identified the candidates, the following costs may apply.
In addition, for the duration of your hiring process, there is also a corresponding loss of productivity for the personnel involved in recruiting and selecting your new employee. The members of the hiring team will not be able to do all of their regular work and this may cost your business in terms of lost revenue. The longer the position is vacant, the more it may also cost you in terms of overtime for existing staff and lost opportunities.
The salaries of personnel form the greatest portion of your cost of hiring and this multiplies based on the length of time it takes to complete the process. In short, the longer your hiring process is, the higher the cost of hiring.
Recruiting analytics are the key to cutting your company’s cost of hiring. With applicant tracking software you know how much time it takes your company to hire, how many employees are involved in the hiring process, what your best referral sources are, and more. You can then make informed decisions on where and how to cut costs.
One way to then lower your costs is to only invest in your most effective recruitment sources. If one job board is more effective for your company than others or if employee referrals are your top source, you can save money by focusing on the proven method.
The longer your hiring process is, the higher the cost of hiring. Use your applicant tracking system to see how much time is spent in each part of the process and what the associated costs are. With this data, you can then see where to refine your process and speed things up.
Your data will also let you compare your company’s cost of hiring with the costs incurred by other organizations, showing you if your costs are atypical. To do this, use the new standard for calculating the cost per hire that was developed by the American National Standards Institute (ANSI) and the Society for Human Resource Management (SHRM) in 2012.
Remember that, above all, you need to invest in finding the right employee for the job. Use your data to refine your process and cut unnecessary expenses, but not at the expense of quality. At the end of the day, investing more in your hiring process makes much more sense than suffering the costs of a bad hire!