As a part of our new HR metrics initiative I am trying to nail down an as accurate cost per hire metric as possible. I want this metric to include all labour costs on top of all recruitment expenses.
My problem is that I am having trouble including many different variables in order to come to an exact figure.
So far I am looking at:
1) Total recruitment costs
2) Recruiter efforts
a. Calculated: (average recruiter salary / # of work days) * 10%(see note) * average days to recruit * number of active recruiters
3) Total new hires
Note: 10% is an estimate of how much of the recruiter’s day is spent on recruitment (this doesn’t seem legitimate enough)
My formula looks something like: (1 + 2) / 3
For some reason, this figure looks too low and I think it has something to do with the recruiter effort step. This step does not take the number of new hires into consideration, and the amount of effort as the new hires number rises – whether this is an exponential or linear growth (I don’t know).
I hope I have made this as clear as possible, I will monitor this post to comment on any replies or questions you may have. Any help is appreciated.
Thanks,
sjak
From Canada, Toronto
Acknowledge(0)
Amend(0)
My problem is that I am having trouble including many different variables in order to come to an exact figure.
So far I am looking at:
1) Total recruitment costs
2) Recruiter efforts
a. Calculated: (average recruiter salary / # of work days) * 10%(see note) * average days to recruit * number of active recruiters
3) Total new hires
Note: 10% is an estimate of how much of the recruiter’s day is spent on recruitment (this doesn’t seem legitimate enough)
My formula looks something like: (1 + 2) / 3
For some reason, this figure looks too low and I think it has something to do with the recruiter effort step. This step does not take the number of new hires into consideration, and the amount of effort as the new hires number rises – whether this is an exponential or linear growth (I don’t know).
I hope I have made this as clear as possible, I will monitor this post to comment on any replies or questions you may have. Any help is appreciated.
Thanks,
sjak
From Canada, Toronto
Acknowledge(0)Amend(0)
Hi,
I hope I shall also share my idea on the cost per hire metrics so that things would be easier.
Before calculating the cost per hire metrics, we would consider the following criteria:
1. Recruitment channel - (Vendor, employee referral, or internal recruitment)
a. Vendor - what is the invoice amount paid to the vendor for a particular hire.
b. Employee referral - What is the incentive paid to the employee for the referral.
c. Internal hiring - Though we might think internal hiring is of zero cost, it would also involve a few costs which are to be taken into consideration, like the cost of the job sites and the salary paid to the recruiters.
Now, the cost per hire will be:
Vendor cost or Employee referral or direct cost (internal hiring) / total number of hires
This can be calculated for the number of hires for a particular month or for a stipulated time being.
For calculating the cost of internal recruitment, consider these things:
Number of recruiters * their salary per month + Source of resource cost per month (like job portal/referral cost, etc.)
For example, three recruiters with a salary of 10,000 per month and using one job portal at $120,000 per year will be:
(10,000 * 3) + (120,000 / 12) = $40,000
This is how the cost per hire metrics can be developed so that it would be really helpful for us to understand the cost per hire. Note that this is the additional cost excluding the salary offered to the candidate.
Hope this would be helpful and shall give you a small idea of developing the metrics.
Feel free for further queries at jayavel.k@gmail.com
Regards,
K. Jayavel
From India, Madras
Acknowledge(0)Amend(0)
10I hope I shall also share my idea on the cost per hire metrics so that things would be easier.
Before calculating the cost per hire metrics, we would consider the following criteria:
1. Recruitment channel - (Vendor, employee referral, or internal recruitment)
a. Vendor - what is the invoice amount paid to the vendor for a particular hire.
b. Employee referral - What is the incentive paid to the employee for the referral.
c. Internal hiring - Though we might think internal hiring is of zero cost, it would also involve a few costs which are to be taken into consideration, like the cost of the job sites and the salary paid to the recruiters.
Now, the cost per hire will be:
Vendor cost or Employee referral or direct cost (internal hiring) / total number of hires
This can be calculated for the number of hires for a particular month or for a stipulated time being.
For calculating the cost of internal recruitment, consider these things:
Number of recruiters * their salary per month + Source of resource cost per month (like job portal/referral cost, etc.)
For example, three recruiters with a salary of 10,000 per month and using one job portal at $120,000 per year will be:
(10,000 * 3) + (120,000 / 12) = $40,000
This is how the cost per hire metrics can be developed so that it would be really helpful for us to understand the cost per hire. Note that this is the additional cost excluding the salary offered to the candidate.
Hope this would be helpful and shall give you a small idea of developing the metrics.
Feel free for further queries at jayavel.k@gmail.com
Regards,
K. Jayavel
From India, Madras
Acknowledge(0)Amend(0)
Hello,
Regarding your cost per hire calculation, you should first ensure that you have included all possible recruitment costs. Depending on what you use to source, this may include advertising, online job boards, headhunter fees, employee referral incentives, etc.
The biggest issue I see with your calculation is that you have only allocated 10% of recruiters' salaries to your recruitment costs. If the recruiter's sole job mission is talent acquisition, then I think it is reasonable to say 100% of their salaries should be included in your calculations. Obviously, they will perform other administrative duties, as does every job; however, the recruiter's end product is staffing. One way to think about it is if you decided to completely outsource the recruitment function, will 100% of their salaries go away? If the answer is yes, then it is fair to allocate 100% of their overhead to recruiting costs. In some organizations, a recruiter may also share other responsibilities, such as the role of an HR Generalist. If this is true for your organization, then you should allocate their time accordingly.
I hope this is helpful. Please feel free to contact me or post here with questions or follow-up discussion.
Craig
From United States, Temperance
Acknowledge(0)Amend(0)
Regarding your cost per hire calculation, you should first ensure that you have included all possible recruitment costs. Depending on what you use to source, this may include advertising, online job boards, headhunter fees, employee referral incentives, etc.
The biggest issue I see with your calculation is that you have only allocated 10% of recruiters' salaries to your recruitment costs. If the recruiter's sole job mission is talent acquisition, then I think it is reasonable to say 100% of their salaries should be included in your calculations. Obviously, they will perform other administrative duties, as does every job; however, the recruiter's end product is staffing. One way to think about it is if you decided to completely outsource the recruitment function, will 100% of their salaries go away? If the answer is yes, then it is fair to allocate 100% of their overhead to recruiting costs. In some organizations, a recruiter may also share other responsibilities, such as the role of an HR Generalist. If this is true for your organization, then you should allocate their time accordingly.
I hope this is helpful. Please feel free to contact me or post here with questions or follow-up discussion.
Craig
From United States, Temperance
Acknowledge(0)Amend(0)
I agree with the above posters. If you care about the costs of recruiting, and you should, you ought to give how and what you measure around costs some serious thought. Think about getting some professional assistance with your analysis. It will pay for itself many times over.
From India, Mangaluru
Acknowledge(0)Amend(0)
From India, Mangaluru
Acknowledge(0)Amend(0)Gathering data for an AI comment.... Sending emails to relevant members...
Looking for something specific? - Join & Be Part Of Our Community and get connected with the right people who can help. Our AI-powered platform provides real-time fact-checking, peer-reviewed insights, and a vast historical knowledge base to support your search.
Future of HR Metrics.ppt
Recruitment Cost Analysis.xls
Hr metrics.doc