Cost Per Hire is synonymous with terms like recruitment, hiring, and talent acquisition. It is a crucial parameter that is always on the radar of your HR and talent acquisition (TA) teams. Before we venture to provide more tangible insights, let us first understand Cost Per Hire or CPH. By definition, CPH is a metric that refers to the total actual cost of employing a new/ potential candidate. The cost includes the implementation of sourcing strategies, hiring processes, travel, administrative, and equipment expenses that are spent by organizations towards their recruitment function.
Understandably, anything that measures money is also a metric used to measure financial growth, set financial benchmarks and cost reduction tactics. CPH is one such metric that facilitates budget allocation to handle the unpredictable fluctuations in workforce planning. It is also one of the biggest cost-savings benefits of RPO that's encouraging organizations to consider outsourced recruitment. Here are some more reasons that will help you gauge the importance of monitoring your Cost Per Hire.
Ensure Consistent Expenditure In Recruiting
Every employee is an asset and an investment. No matter the size of your recruitment budget, ignoring your cost per hire is not a prudent move. Most companies end up spending nearly 40-60% of their budget on candidate sourcing and candidate attraction solutions. This expense will reverberate in the consequent stages of the hiring process. Monitoring your CPH should be a critical feature of your business model that allows you to track recruiting process conversion rates and account for every single penny in your budget, and ensure you spend consistently across hires.
Make informed Outsourcing decisions:
Your CPH is tied to your external and internal recruiting costs. It invariably means that every member of the recruitment panel is well-versed with the overall direct costs of recruitment and the desirable CPH. This information helps the hiring managers to make informed decisions when planning talent pipelines, with the CPH in mind. Such informed hiring decisions will lead to a higher quality of hires that come within your recruitment budget and help you to better forecast future hiring needs.
Recruitment Process Outsourcing Ensures High Return Of Investment
Every business demands an assured Return Of Investment for every penny they invest. RPO is no exclusion. Keeping track of CPH is important because it is tied to all other recruiting costs. Without tracking CPH, you can miss the returns on your recruitment investments. This knowledge is also vital when you want to make a new investment in your recruitment strategy You cannot prove the ROI of a new RPO -technology unless you have information on the average cost incurred from the old one.
It takes a lot of effort to understand, implement effective recruiting strategies and control CPH, which is why your RPO partner can handle all this and offer an innovative solution.
By partnering with an RPO provider, your Human Resource professionals will be empowered to take charge of their CPH and maximize their return on investment. Besides, RPO experts also help effectively manage your recruitment costs with scalable hiring strategies. By and large, you can keep CPH within your control and make the most of your investment with your outsourced recruitment providers.
with your outsourced recruitment providers.
There are different RPO solutions that facilitate this cost-efficiency. Let's take a closer look.
Shared risk and responsibility.
It is common for organizations to go through phases where they need to tone down their recruiting needs. Likewise, business expansion and new projects induce the need for additional candidates. One of the top benefits of using RPOs is their niche expertise in understanding fluctuating requirements in talent acquisition and predicting future workforce trends. Unlike traditional staffing agencies, RPOs offer flexible models that can effectively cushion these fluctuations reflected in your internal costs. RPOs also provide additional scalability benefits and help in the continuous optimization of your recruitment costs.
Simpler recruitment processes
Companies are often beleaguered by decentralized processes and disjointed candidate experiences, which can eventually damage your employer brand. Both aspects do not bode well for operational costs. However, best in class RPO providers come with deep specialization in the industry and can understand the intricate nuances affecting your cost control. As experienced recruiters, they immediately deploy the following strategies that also result in overall process improvement:
From posting job advertisements to screening, interviewing, and onboarding, every step of the recruitment process requires money. The slower these processes are, the more money they guzzle. On the contrary, your RPO provider can reduce hiring time by deploying agile solutions across every touchpoint. They can curb extra costs by ensuring quick, error-free, and efficient processes to find skilled workers. Additionally, with RPO teams by your side, you do not lose out on the contributions made by your in-house staff for your core operations.
Improved Efficiency Using data analysis
Data analysis is an essential benefit rendered by most RPO firms. This advantage is particularly helpful for small businesses that may not have access to talent data, and cannot otherwise afford to implement data analysis/ talent analytics on their own. RPO teams use data collected from a wide range of sources and use it to optimize their processes even before you hire them. With this data analysis, they can also provide you with an ongoing visibility of CPH in your recruitment processes. Apart from enabling better decision making, data analysis further helps you to:
There is a chasm of difference when you choose to team up with an RPO firm. Without a doubt, it is an investment. But it is an investment that is controlled, with every penny accounted for. Better ROI, controlled CPH and improved retention rates , regular reporting and tailored solutions are some of the great benefits of RPO model. Additionally, you have the assurance of a team that navigates the cost risk involved in workforce planning with a deft hand.
Techfetch RPO offers some of the most cost-effective recruitment process outsourcing solutions to give you that competitive edge. Backed by superior industry expertise, our dedicated team can give you the right advice and effective recruiting solutions to make your investment worthwhile. Please contact our team for all your talent advisory needs and in-depth guidance.
Please contact our team for all your talent advisory needs and in-depth guidance.