Top Diversity Measures and Metrics: Cost-per-Hire

One of the most significant benefits of any diversity program is improved organizational bottom-line in terms of reduced costs and/or increased revenues. One way to significantly impact your bottom-line is to reduce hiring costs, which you can assess by determining cost-per-hire. By definition, cost-per-hire is the average of total hiring costs divided by the number of hires in a specific time period. By determining your cost-per-hire on a regular basis (e.g., annually or semi-annually), you can evaluate the effectiveness of your recruitment and selection methods, and make adjustments that yield better financial results. Here is a simple formula you can use to determine cost-per-hire (CPH):

• CPH = Total Hiring Costs/Number of Hires in a Designated Period
  
• Sample Hiring Costs: Advertising Costs (AC), Agency Fees (AF), Job Fair Costs (JF), Referral Bonuses (RB), Travel and Relocation Expenses (TR), Staff Costs (SC) and Miscellaneous Expenses (ME)
  
• Example: $18,000 (AC) + $24,000 (AF) + $5,000 (JF) + $12,000 (RB) + $114,000 (TR) + $56,000 (SC) + $16,000 (ME) = $245,000 ÷ 75 new hires = $3,267.67 per hire. You can then use this number as a baseline to evaluate any changes you make in your recruitment and selection methods.
  

Next Post: November 11, 2013 – Top Diversity Measures and Metrics: Cost-per-Diverse Hire