The business climate and labor market is poised to be a challenging one in 2024.
The prevalence of layoffs and hiring freezes, especially in the tech sector, suggests that professionals are likely to stay in their current roles and postpone job exploration until the economic conditions improve. Despite the challenging economic climate, companies must be prepared to restart their recruitment efforts and get prepared to attract talent in a changing world, the talent who can help them achieve their growth goals.
In this environment, reducing the average cost per hire is more crucial than ever, as organisations have tightened their budgets amid the ongoing market downturn. The average cost per hire (CPH) emerges as a pivotal metric in this endeavor. By strategically managing your CPH, you can make substantial savings while still attracting and hiring the best candidates for your organisation. In this comprehensive guide, we shall delve into the strategies and tactics that can assist you in reducing your company's CPH. Whether you're a hiring manager or a Talent Acquisition (TA) leader, these insights are crafted to enhance your recruitment practices and, ultimately, boost your bottom line.
Before we plunge into the specifics of decreasing CPH, let's establish a clear understanding of what it involves. The CPH formula is quite straightforward: it entails the total sum of both internal and external recruiting costs divided by the total number of hires made within a specified period, usually analysed monthly. This formula lays the foundation for comprehending the financial implications of your recruitment processes. Below, we dissect the elements contributing to your company's CPH.
Both internal and external costs are associated with your Talent Acquisition (TA) strategy, collectively influencing your CPH. Internal costs may encompass everything from the time spent by your internal team on recruitment activities to expenses such as relocation costs for new employees, which have a significant impact on your organisation's overall CPH.
On the external front, you'll encounter various expenses, including agency fees and travel costs linked to attending on-campus recruitment events, job fairs, and other in-person gatherings where job seekers convene. Recognise that these costs can accumulate over time, potentially inflating your CPH.
Failing to consistently reduce your CPH can result in several adverse consequences for your organisation:
Now that we've explored the significance of managing your CPH, let's delve into strategies to help you effectively reduce your average cost per hire.
Attracting the right candidates is a pivotal aspect of reducing CPH. One effective strategy is to be transparent about the pay offered for active roles. Here's why this approach is important:
The tools and partnerships you choose for your recruitment process significantly impact your CPH. It's essential to assess their effectiveness.
Legacy Applicant Tracking System (ATS) software can be a culprit in maintaining high CPH averages. These systems often have outdated database structures and lack advanced candidate relationship management (CRM) features. On the other hand, modern and easy-to-use ATS systems like Occupop provide native sourcing, nurturing, interviewing, automation, and analytics capabilities that streamline the recruiting process.
By optimising the back-end work and allowing your recruiters to focus on high-value work like the candidate experience and nurturing, you can accelerate the hiring process, reducing your CPH.
Innovative technologies have revolutionised the recruitment industry, offering various tools and platforms that can help you streamline your hiring process and reduce costs. Here are some advanced strategies for harnessing the power of technology this year:
Different types of external Recruitment Agencies or RPOs specialise in specific industries or hiring needs, such as high-volume hiring for manufacturers or executive hires for enterprise organisations. To reduce your CPH, you must select the right agency or RPO vendor for your company's headcount needs and growth objectives. Conduct a comprehensive evaluation by considering the following criteria:
Above all else if you regularly engage with external agencies, job boards, or other vendors in your recruitment efforts, contract negotiation should be on your list of activities this year. As a key decision-maker in the hiring process, you have the power to discuss terms, pricing, and service levels with your vendors. By doing so, you can reduce your recruitment costs and ensure that you're getting the best value for your investment.
Analytics have become indispensable in making informed, data-driven decisions. When it comes to reducing CPH, merging your recruitment and HR analytics into a single source of truth can be a game-changer. In the world of recruitment, it is essential to track and analyse your recruitment data meticulously. By closely monitoring your recruitment metrics, you can identify inefficiencies and areas where you can reduce costs. Start by assessing the performance of your current hiring processes. Are there stages in your recruitment funnel that are more costly than others? Are there any specific job boards or sourcing channels that consistently yield better results? Gathering and analysing this data can help you make informed decisions and allocate your resources more efficiently.
Data-driven decision-making provides several benefits for your TA strategy:
Integrating advanced analytics into your TA strategy involves utilising sophisticated software solutions like Occupop. These platforms offer comprehensive out of the box analytics that enable talent leaders, operations managers, and specialists to monitor the progress of key recruiting metrics. By accumulating data with the intent of making data-driven decisions, you can significantly impact your CPH.
With a workforce of over 2,000 individuals, BBF Limited holds a significant presence in the competitive food manufacturing industry. Their growth strategy is anchored in aligning their employer brand strategy with an engaging candidate journey, and they recognised the need for a recruitment solution that could support these objectives effectively. Before embracing Occupop, BBF Limited encountered significant challenges that hampered their recruitment efforts. These included the absence of job board integration and an overall lack of organisation, which led to manual and time-consuming processes.
The implementation of Occupop delivered tangible results for BBF Limited, bringing about a significant transformation in their recruitment processes and delivering substantial benefits. A compelling result was the significant reduction in recruitment costs. By streamlining their processes and leveraging the capabilities of Occupop, BBF Limited realised annual cost savings amounting to approximately £350,000 when compared to the pre-Occupop era, during which they lacked a dedicated Applicant Tracking System (ATS).
Beyond these cost savings and efficiency improvements, BBF Limited reaped additional benefits, including an enhanced candidate experience, heightened employer brand visibility, and the establishment of a central hub for all their recruitment activities. Occupop's robust analytics and reporting capabilities provided a deeper understanding of hiring success, while its remote hiring solution proved invaluable during challenging times. Read the full case study here.
Reducing your company's average cost per hire is not just about cutting expenses; it's about optimising your recruitment process to attract the best talent efficiently. By being transparent about pay, assessing your technology and partnerships, and implementing advanced analytics, you can make substantial savings while enhancing the quality of your hires. Whether you're a hiring manager or a TA leader, these strategies are your key to a more cost-efficient and successful hiring process. Embrace the power of data, and you'll find your recruitment efforts more effective, streamlined, and budget-friendly.
Are you ready to make the change and reduce your company's average cost per hire? Implement a more cost-efficient recruiting approach with Occupop, a beautifully simple ATS designed for small and mid-sized businesses. Chat with the Occupop team today and take it for a test drive with a free, access all areas, 14 day trial.