Cost-per-hire is the metrics used to measure the efficiency of an organization hiring an individual with optimum costing. Increasing cost-per-hire is becoming a threat to the efficiency of the companies today.
Therefore, the cost of recruitment holds a high priority for all the recruiters failure to which can lead to serious consequences.
To understand the budgeting and controlling expenses in the recruitment process we share this blog with you today.
Table of content
What is Recruitment Cost Structure?
Recruitment cost structure is classified into three categories for managing the cost of hiring namely,
- Internal cost: The cost of hiring associated with internal recruitment is known as internal cost. They can be included in salaries and incentives, recruitment technologies like ATS and internal job postings.
- External cost: Here, the cost is associated with external factors involved in recruitment such as external job posting boards, recruitment agencies and background checks and assessments.
- Indirect cost: Indirect costs are not mostly tangible and not related to recruitment directly such as lost productivity due to vacant positions and onboarding costs like travel expense and training costs.
How to Budget the Recruitment Process?
Budgeting for recruitment costs holds a priority for the HR leaders as it affects the entire cycle of finance.
Here’s how you can budget:
- Analyze historical data for the position:
Utilize historical data present for the position you are hiring for. This will help you to gather and analyze the information regarding the cost incurred during the process and other expenses throughout.
With this you can get the estimates and plan your recruitment structure accordingly.
- Opt for a collaborative approach:
Collaborate and communicate with the hiring manager and the expert in the field to ensure that you approach the candidate with confident compensation.
They can help you with changing trends and their expectations with the coming talent. In accordance with this, you can set the budget and set the structure of the recruitment process.
- Grab the “free-of-cost” opportunity:
Never miss an opportunity where you get free-of-cost optimization of resources. Harness the free channels of reaching the target talent pool such as social media.
Advertise wherever possible and especially where it incurs you no penny at all.
- Expect the unexpected:
Obstacles are a part of journey, but we are not some orthodox managers now, right? We are smart enough to take care of these situations.Anticipate the future hindrances in advance and set aside a small budget in case the situation occurs. For example, candidate dropouts or delayed hiring decisions. These issues can cost you a fortune with your top talent.
How to Control Expenses in Recruitment Process?
Today a smart person is the one who understands how the world is evolving and steps ahead with it. Creating strategies for cost-effective recruitment in advance will help you not to panic and be responsible.
Call yourself a smart HR leader by managing your cost of hiring with these approaches:
- Leverage technology:
Whom are we kidding? Even water costs today! But you know you can save a big number if you digitalize yourself.
Well, HRMS has proven to be a life savior lately for our HR leaders. Try and choose HR software for your recruitment process as much as you can.
It will lower your upfront costs related to advertising the internal job postings or utilizing features such as Application tracking System (ATS) or a separate performance measurement metrics.
- Advance your process:
Instead of quantifying, qualify your recruitment process. An average interview costs around twenty-five thousand which is huge.
Now suppose if there are around 10 interviewees how much it would cost you.
To avoid this situation, you can improve your hiring process by minimizing the number of interview rounds, choosing a good hiring manager with better decision-making skills.
- Analyze metrics:
Self-assessment makes you better every time.
Briefly analyze and pick out the area points where you think you could have done better.
Track down the trend of cost-per-hire after the hiring process of candidates. You can manage this with regular inspection in a quarter or semi-annually. - Consider pre-assessments:
The way we judge a movie by its trailer, you can assign some assessment to the candidate before the actual interview to get an insight of their competence and skills.
This will spare you from putting your time and effort into interviewing a not-so-suitable candidate. This can be cost-effective and optimal usage of resources in the recruitment process.
In this competitive talent market, cost control is at its peak and one of the major concerns for most companies. More organizations (57%) expect increased talent competition over the next six months as of August 2022, compared to 50% in July 2022, according to Gartner survey.
Conclusion
Have you ever wondered if recruitment is a cost or an investment? Well, “Inflationary pressures have worsened talent retention issues in an already hypercompetitive labor market and executive leaders must select a compensation strategy that mitigates talent risks while minimizing cost pressures”, as stated by Gartner.
Managing and controlling expenses in recruitment has always been a crucial challenge for recruiters with all the changing trends, increased employee expectations, technologization, and the changing needs of the organizations.
But we are putting our best efforts to keep our surroundings harmonious and tranquil by evolving ourselves with the situations.
HROne enables its users to harness various features such as tracking applications, internal job postings, parsing bulk resumes, managing employee referrals and generating HR analytics reports to analyze the recruitment process.