Do You Know Your Company’s Cost-Per-Hire?  

A key metric often unnoticed by senior leaders is the total cost spent to acquire top talent each year.  It’s easy to assume that an internal recruiting department is needed because:

  • “Our business is complex, only insiders can understand it.”
  • “Our own recruiters add more value by doing other projects.”
  • “Outside recruiting firms are probably too expensive.”

 Whether these premises are valid or not, the question remains: do you know your annual cost-per-hire?

 Here’s a basic equation to help determine what that number may be: “R” represents a typical recruiter’s salary; “B” stands for benefits; “O” equates to overhead such as IT support, recruiter tools & advertising, corporate administration and physical plant, and “H” equals the number of new hires made annually.  “X” is the number of recruiting FTE’s (including managers) you maintain in your shop:

 x(R + B + O)
__________________

H

 To keep it simple, just estimate with conservative numbers to account for most inputs.  Although amounts can vary widely according to the size of each employer, as a starting point here are some ranges relevant in the Richmond area:

R = $40,000 – $75,000
B = 25% – 45% of base salary
O = 25% – 35% of base salary for administrative overhead; also, $5K – $15K
annually for tools & advertising (per recruiter)

With the approximate cost-per-hire number in hand, decision-makers are better equipped to explore options for delivering high-value recruiting services to their organizations.  Third party firms can provide alternative ways to address unique staffing needs of all sizes and shapes.

With your number in hand, ask potential suppliers to show you their number.  Have them respond to the three concerns outlined above.  Once you do, you may have even more to think about.

Recruiting Company Cost Richmond Charlottesville Virginia Beach Washington CD Metro Area