November 20, 2021

What is your Cost-per-Hire?

Per developer hiring cost

Cost-per-hire is one of the most critical metrics to quantify the impact and measure the success of Talent Acquisition, Recruitment, and HR programs. It measures the average costs a company spends to fill an open job position. In addition, it helps track or create a recruiting budget.

Companies track and calculate cost-per-hire to analyze the efficiency of their recruitment process for the amount spent on each hire. Thus, it helps entrepreneurs optimize the hiring process and better determine how to attract better talent while saving valuable dollars.

How it Works

Cost-Per-Hire is the total cost of hiring new employees to the company. The CPH metric measures the costs associated with filling an open position including, sourcing, screening, and recruiting, and it includes all the costs a company spends while filling a position.

The formula:

CPH is a ratio of the total money spent, including internal and external costs, to the total number of hires in a specified time.

  • CPH= external costs +internal costs/Total no of hires

Internal costs Examples:

  • Recruiter salaries
  • Employee referral bonuses
  • Recruiting software and hardware
  • Fixed costs like physical infrastructure (e.g., office rental)

External costs Examples:

  • Recruiting and sourcing costs
  • Job marketing costs
  • Career fair expenditures
  • Recruiting travel expenses

What is the average cost-per-hire?

In the United States, the median cost per hire is $1,633. It takes 36 to 42 days to fill an average position. Whereas, the

The cost-per-hire can vary depending on many factors, such as:

  • Company size
  • Job Designation
  • Hiring volume
  • Specific roles
  • Industry etc.

The cost per hire is lesser for hiring candidates at an entry level. The cost-per-hire is higher for software and tech-based roles than marketing or sales.

Why measure cost-per-hire metrics?

An exact estimate of each Cost-Per-Hire helps determine the total cost of hire annually.

Calculating CPH each year helps organizations track all hiring costs, gain valuable insights, and evaluate the cost-effectiveness of their hiring process. Based on this analysis, companies can optimize their future recruiting strategies and plan budgets to achieve better hiring results cost-effectively.

How to Optimize or Reduce your recruitment costs?

The cost of recruitment, including all internal and external costs, puts a massive load on the company’s annual budget. There is always pressure to cut these costs and keep the cost per hire under check. But it should not lead to poor quality of hire. Then, what is the way out?

Companies can reduce or optimize their cost per hire by shifting from traditional hiring to advanced hiring technologies. The most innovative way is to automate your hiring process with not just an ATS (Applicant Tracking System) but an end-to-end Recruitment Automation Platform.

The future-proof Automation Talent Acquisition Platform can help companies find the best talent with the minimum effort and time-to-fill. Companies can streamline their hiring process using AI-ML-powered screening, assessing, interviewing, and application tracking, thus saving costs.

How does pa2recruit help you optimize Cost-per-hire?

With traditional hiring, companies have to invest a lot of money and time.

In India on average, the HR Team spends a minimum of 6 hours recruiting one candidate. It includes:

  • Upload resumes in ATS/G-drive and data gathering.
  • Contact the concerned person in the technical team and resume review.
  • Contact technical team and candidates to schedule first screening round
  • Gather feedback from the technical team for the first screening round.

While the Technical Team spends a minimum of 15 hours reviewing candidate resumes for technical skills and projects and sharing feedback for the screening round.

In India, the expenses on HR team and Technical team salaries cost around 15000 INR per hire. A massive investment of time and money, right?

We enable the HR Team to make independent decisions confidently based on data. They can test a candidate’s technical or software-specific skills using our AI-powered ready-to-use assessments. pa2recruit increases the hiring success rate while minimizing the cost-per-hire.

With reduced technical team dependencies and automation, pa2recruit helps to save 

  • 80% to 90% Technical Team Time
  • 70% to 90% HR Team Time. 

Tracking your recruitment quality and costs helps you hire the best talent on budget. pa2recruit keeps your Cost-Per-Hour metrics optimized while acquiring the right resource.