Recruiting Metrics: Beyond Cost Per Hire | Jobs In MD

Recruiting Metrics: Beyond Cost Per Hire

By: Jason Blais

Cost Per Hire

It's no surprise that a recent poll showed Cost Per Hire as the most commonly analyzed recruiting metric. It's easy to count the number of applicants and hires per advertising source. It's also a relatively easy process to calculate how many advertising dollars were spent to fill a position.

But these are second-level metrics, focused on the actual process itself. And they can often be short-sighted.

Measuring Value

A better recruiting analysis question is: how valuable are the hires to the business? To answer this, you have to look at how long it takes for each hire to become productive and how long they stay with your company. Employee retention affects quality of the work being done by your company and your turnover costs.


Let's assume that an entry level position at your company earns $25,000 in wages, and has an average annual turnover of 30%. While the costs related to turnover vary greatly, a conservative estimate is approximately 1.5 times the employee's salary. Therefore, each time you have to fill that entry level job, it costs the company $37,500.

If you can reduce your turnover to 15% annually by attracting better candidates, then the potential value of your recruitment advertising is significant. In a department of 10 (of these entry level positions), you're reducing your average annual turnover costs from $112,500 to $56,250.

Improving Your Bottom Line

Defining the success of recruitment advertising is an important first step to developing more effective strategies for talent acquisition. Ensuring that you're attracting the best person for your company for all of your job openings is absolutely critical to your long term success, particularly when employers are forced to do more with less.

In 2009, I fear that more employers will be too focused on bottom line or second level metrics, such as Cost Per Hire. Through this strategy, businesses will end up sacrificing future growth opportunities as they focus on costs only. The most successful companies, however, will refuse to compromise their long term goals for short term gains, and will continue to analyze and invest in their recruitment advertising, adhering to the principles that great businesses are built by great people.