Recruiters use all sorts of metrics to track their efforts: retention rate, time to hire, time to fill, etc. But in many hiring departments one metric stands above the rest in terms of weight and importance. Yes, we’re talking about cost per hire. As it happens, many of the other metrics, like time to fill and time to hire, have a direct impact on cost per hire, just as cost per hire itself has a direct impact on your company’s bottom line. The age-old question is, “what can recruiters do to reduce their cost per hire and recruit talented team members in a more cost efficient way?”
1. Build up Your Talent Pipeline
As you’re going to see from the rest of the content in this post, almost every element of the hiring process can and does have an impact on the total cost of finding the right addition to your team and enticing him or her to take a position with your company. Towards the top of the funnel, however, one of the most important steps you can take towards improving your cost per hire is to develop a robust talent pool full of potential applicants who are already familiar with your employer brand and excited about the possibility of a job at your organization. Let’s say you have to hire a new developer to replace a team member who just left the company. Without a talent pool to source from, you would essentially be recruiting for this new team member from scratch by familiarizing potential candidates with your employer brand, enticing them into your recruitment funnel, and then screening, interviewing, and hiring them.
By contrast, if you’ve already used your employer branding materials to educate future applicants about your mission and your EVP—perhaps even getting some interested job seekers to sign up for a newsletter or follow a social media page—then with each new position that needs to be filled you can greatly streamline the sourcing process. In this way, you move much towards interviewing your top candidates much more quickly, thereby saving time and money.
2. Source Candidates on Social Media
Reading over the section about building a talent pool, you may have been wondering how, exactly, to go about spreading your employer brand in a way that gets active and passive job candidates alike interested in your business. One of the most powerful tools for accomplishing this aim is to utilize social media platforms like Instagram and Facebook. Which channels you pick will vary based on your industry and the demographics of your employee personas, but social media sites currently represent some of the best options for engaging with not just active but passive candidates—because billions of people across the world use these sites daily, whether they’re job searching or not. Traditional job boards, by comparison, only attract the 20% of candidates who are actively job searching at any given time. Expanding beyond these traditional methods vastly increases your potential pool of applicants while actively growing that pool through targeted content. Thus, your cost per hire decreases as your employer brand reaches more qualified, engaged applicants.
3. Encourage Employee Referrals
So far, we’ve spoken about the process of decreasing cost per hire by amplifying your recruitment marketing efforts—but not all hires are going to be found this way. Many businesses have discovered that employee referrals can be a key piece of the hiring puzzle, with referred candidates often moving through the recruitment process more quickly and at a lower cost to the business. Businesses can and do incentivize their existing employees to refer others to the company with bonuses and commissions, but even these programs are fundamentally built on the foundation of a strong employer brand. Your employer brand, after all, shouldn’t just be aimed at those outside your company. On the contrary, it should speak to your current employees and inspire them to take pride in their work and share their experiences with friends and acquaintances. Creating an employer brand of this strength isn’t something that happens overnight, but it is something that can have a meaningful ROI, in part because your employees will be excited to share news and opportunities at your company in person and on social media.
4. Implement Landing Pages
We’ve seen the ways that strong employer branding can reduce your cost per hire in the past few sections, but is that the only factor when it comes to improving your cost efficiency for recruitment? Of course not! Just as crucial as the image you project is the way that you treat the people who enter your hiring process, i.e. your applicant experience. This includes everything from online applications to e-mail etiquette while scheduling interviews. Poor applicant experience can cause qualified candidates to drop out of your process prematurely (in fact, 50% of all candidates drop out before completing an initial application—usually because the application itself is long, cumbersome, and frustrating). The inevitable result is slow hiring. It can also cost you in terms of employer brand; studies show that those who have a poor experience in a company’s hiring process tend not to be shy about sharing their experience with others, which can have a cooling effect on your candidate sourcing.
By contrast, a world class applicant experience can make qualified candidates feel like their time and efforts are being respected, encouraging them to stay in your process through the initial application and then, if warranted, into the interview stages. One of the easiest ways to create an applicant experience that serves this goal is to implement an attractive, easy to use landing page for each job ad that you post. Rather than redirecting to your corporate careers page, which might be complex or confusing to navigate, present your potential candidates with a link that goes to a clean, simple page dedicated to the position that’s being advertised. In this way, you shepherd them into the actual application with a minimum of fuss or confusion. If, at that point, they’re met with a short, straightforward online application, not only will they not drop out of the application process, but they’ll actually become more interested in your company and more engaged with the process—both crucial to keeping cost per hire down.
You might think that in an article about an important hiring metric it would go without saying that tracking your metrics and KPIs is incredibly important, but we’re not afraid of stating the obvious sometimes. The best way to decrease your cost per hire is, first of all, to know exactly what it is, and how exactly it’s changing over time. Not only that, but it’s crucial to track related metrics like time to hire, total applications, total ad impressions and clicks, attrition rate, and apply rate, in addition to employer branding stats like social media engagement and impressions. In this way, you can begin to assess a) whether or not you have a problem; b) what part of the funnel the problem may be occurring in; and c) how you might go about remedying the situation. At the end of the day, whatever approach you take to improving your cost per hire, your success will be contingent on your ability to understand the impact of every facet of your recruitment funnel.