Future Talent: Increasing Cost Per Hire for the Good of Your Business
Seb O’Connell, Cielo’s Executive Vice President and Managing Director for Europe and APAC, wrote a piece for Future Talent titled, “Increasing Cost Per Hire for the Good of Your Business.” In it, Seb explains that decreasing cost-per-hire does not necessarily result in budgeted cost savings, but can actually increase your costs over time and hamper your organization’s ability to achieve its goals. Instead, he says, you should invest more per hire upfront to save on turnover and achieve savings.
Excerpts from the article:
“Cost-per-hire is a loaded topic. It’s an easy target for talent leaders to communicate throughout their businesses. A simple measure that seems to build a business case almost on its own. If you’re recruiting large numbers of people each year and you reduce the cost per hire, you are probably well on your way to achieving your budgeted cost savings. Great, right? Well, not always.”
“Achieving too low a cost per hire can have a significant impact on the quality of talent and, in return, the organisation’s ability to achieve its goals. In reality, by focusing on one metric in isolation you may actually increase costs over time.”
“When considering how to deliver year-on-year cost savings back into your business, it turns out that cost per hire is not talent’s silver bullet metric. It ignores other factors such as performance, productivity, turnover and time-to-fill, which have a huge impact on managing overall talent costs.”
“Just check out the following from Bersin by Deloitte: organisations that spent twice as much per new hire saw 40% less new-hire attrition and 20% faster time-to-fill. This means your organisation is saving the simple cost of turnover and achieving the savings of a calculated cost of vacancy, all for a slightly larger upfront investment.”