What are the best sources of hire for reducing cost per hire?

The best sources of hire for reducing cost per hire vary depending on the organization and its specific needs. However, generally, employee referrals often prove to be one of the most cost-effective sources, as they typically have lower recruitment costs and faster time-to-fill metrics. Additionally, utilizing internal talent pools, such as promoting from within or rehiring former employees, can be cost-effective options. Other sources such as job boards, social media platforms, and recruitment agencies should be assessed for their cost-effectiveness based on metrics like cost per applicant, conversion rates, and overall return on investment.

This encompasses both internal costs, such as HR staff salaries and recruitment software fees, and external costs, including advertising expenses and agency fees. Once all relevant costs are tallied, divide the total by the number of hires made during the specified period. This method provides a comprehensive understanding of the financial investment required to bring new talent on board, enabling organizations to assess the efficiency and effectiveness of their recruitment processes and make data-driven decisions to optimize costs.

Cost per Hire (CPH) will depend on the employer brand, nature of business, and location. Starts up tend to have a higher CPH given the need to aggressively advertise or partner with recruitment agencies. CPH will also vary if you are recruiting for niche skills or newer roles that are rare to find and much in depend.

Begin by identifying relevant metrics such as average CPH for your industry, region, or company size. Utilize data from industry reports, surveys, and benchmarking studies to establish comparative benchmarks. Assess factors such as recruitment efficiency, quality of hires, and overall cost-effectiveness to determine areas for improvement. Continuously monitor and adjust recruitment strategies to align with benchmarking data, ensuring that your organization remains competitive and achieves optimal results in terms of cost efficiency and talent acquisition.

Lowering cost per hire comes down to your recruiting team. Hiring top talent to recruit for your company, having the tools required to hire talent, and having the means to track cost per hire will provide the best way to lower cost. Top recruiters seek talent continuously and keep records of the top candidates by skill set. Staying up to date on new sourcing tools will aid in hiring talent quickly. Look into new and free sites; GitHub and Slack can be used as a sourcing tools for those niche tech positions. Always source proactively; as being proactive, networking, using your referral base, and maintaining contact/feedback are the best ways to cut costs across your HR budget, and establish yourself as a strong recruiter.

I think the best way to handle lowering cost per hire is to have an HR team member that is aggressively recruiting along with their other HR duties, this team member will have to be passionate and buy in to this method along with being involved heavily with the decision-makers.

Build a solid employer brand, keep engaging with your talent, and have a ready flow of candidates. Spice up your referral channel, engage, appreciate, and reward. Arm your recruiters with the best tools you can afford, and invest in their training.

Employee referral programs, or cooptation, significantly reduce the cost of candidate acquisition in recruitment processes. By leveraging the networks of existing employees, companies can tap into a pre-vetted pool of candidates who are more likely to be a good fit for the organization, both culturally and in terms of skills. This method bypasses the need for expensive job postings and recruitment agency fees

Streamline recruitment processes with technology and automation while negotiating favorable vendor contracts. Invest in employer branding to attract candidates organically and conduct regular cost analyses to identify inefficiencies. Train hiring managers to make effective decisions and streamline the selection process. By employing these strategies, organizations can minimize recruitment expenses while maximizing the quality of hires and overall recruitment efficiency.

Some mindset shifts that can help you manage your CPH 1) Move to skill-based hiring from an exact role/job fitment - this opens up a larger pool to play with and also offers job seekers more options 2) Leverage the GIG economy, where you can engage with contract workforce, and consultants.