Modern talent acquisition teams are measuring everything to ensure that they are strategically managing their hiring programs – including source and cost of hire for any given position. They can then use that information to determine a strategic recruitment plan for future positions.
Tracking your cost of hire
Your recruitment software may be able to crunch this data for you, or you (or your analyst) can dig in to your data on an annual or quarterly basis. Regardless of your method, try to answer the following questions and track them over time:
- When you look at all of your hires for a given time period, what are the most frequent sources? What is your average cost of hire, and what is the cost of hire for each source?
- When you look at your top hires for a given time period, do you see a difference in the most frequent sources and cost of hire?
- What is the most frequent source of hire for entry-level positions? What about mid-level and senior-level positions? What is the average cost per hire for each seniority level?
- What is the most frequent source of hire for each department (i.e. marketing, finance, product)? What is each department’s average cost of hire? How does each department’s cost of hire differ by source?
Answering these questions will help you prioritize your budget and sourcing channels when a new position opens up. Let’s say, for instance, you need to recruit a Chief Marketing Officer. Your recruitment data shows the best source for marketing hires is employee referrals, while the best source for executive level positions is a direct hire agency.
You also know that agency fees are 10x higher than referral fees, so you decide to offer a generous referral bonus to your employees before opening up the search to an agency a week later. Utilizing your data to make strategic hiring decisions in this way will help you focus your time and money on the activities that are most likely to result in successful hires.
You may also benefit from using third party data to benchmark your own. The BountyJobs 2015 Direct Hire Agency Benchmarking Report, for example, will help you understand average agency fees for each industry and job function, so you know where you stand compared to the average organization.
If you are paying significantly more than average, you may have an opportunity to reduce costs by diversifying your agency mix or simply renegotiating with your current agencies.
As both time and cost to hire increase, modern talent acquisition teams know that data is the answer to help them hire more efficiently.
By tracking their own successes, and benchmarking them against industry averages, they can reduce time and cost to hire without sacrificing quality of hire.
Which recruitment metrics are you tracking? Do you look at cost per hire at a granular level to inform your recruitment strategy?