Chances are your marketing department already has several KPIs to measure their marketing efforts. Knowing how to calculate recruiting KPIs can help you improve your recruiting strategy and outcome. And one of the most important ones to keep track of is cost-per-hire.
What is a KPI?
KPI stands for “key performance indicator”. A KPI helps you assess how effective you are at achieving your set of goals. The most important factor in specifying a KPI is that it must be measurable.
KPIs are data that you can learn from. It helps highlight areas where there is room for improvement and development. For example, it can be interesting to know how long it takes for you to recruit, if the new employee is a good match or what the actual price tag ends up being on each recruitment.
What is cost-per-hire?
How much does it cost to fill a vacancy? Cost-per-hire is a KPI that should take into account all costs involved, including how much you pay to post jobs on various job boards, any referral fees, the cost of attending career fairs, etc. Additionally, you should consider the amount of time spent on recruiting by everyone involved in talent acquisition and, where possible, the cost of others helping recruit and train new employees, including onboarding time and interview time.
Why cost-per-hire is one of your most important recruitment KPIs
Cost-per-hire is a valuable KPI when planning your recruitment budget. If you measure how much money you actually spend on attracting candidates, it’s easier to see how effective your talent acquisition strategy is and how strong your employer brand is. You are also able to measure how much money goes into recruiting and you will therefore be able to easier figure out how to lower your cost-per-hire.
What are the next steps?
By looking at the bigger picture, you are able to begin to identify areas where you can improve efficiency and justify retention efforts to reduce employee turnover. It’s also important to keep track of your cost-per-hire in order to set a realistic recruitment budget.
Do you want to find out how to calculate your cost-per-hire and learn about 7 ways to reduce your cost-per-hire? Click here to download our free guide.
Want to find out how Jobtip’s talent automation platform can improve your cost-per-hire? Contact one of our experts here!