Article: What is the sum total of hires

Talent Acquisition

What is the sum total of hires

The average cost per hire is the sum of all external costs and internal costs/total no. of hires in the time period
What is the sum total of hires

Author: Krishna Vamsi


First let us discuss what is cost per hire? How do you calculate it?

It consists of three sub divisions in it

  1. Cost per hire internal
  2. Cost per hire comparable
  3. Recruitment cost ratio

Cost per hire is the sum of total amount spent for hiring to the total hires made in that particular time period

Cost Per Hire = (Sum of all external costs + Sum of internal costs)/ Total no. of hires in the time period

External costs includes all sources of spending outside the organization in the specified time period to meet the recruitment needs which includes advertising and marketing expenses, Back ground check costs, campus hiring expenses, contingency reports, medical check costs, money spent on employee referrals, Job drive/ fair expenses Pre-screening expenses, Relocation fee, Sourcing costs, Travel expenses of the candidates, Technology costs, Third party agency fee, RPO fee

Internal costs include all sources of internal costs and resources used for hiring efforts in that particular period. Cost of recruiting staff, cost of sourcing staff, L&D costs towards recruitment, Non labour office costs

Total hires include all the hires – full time, part time and interns where the effort from organization is induced towards bringing the talent in.

P.S: Do not include salaries of employees hired.

Now here are a few ways you can reduce your costs. Let’s go one by one


Advertising and Marketing expenses: Every organization is allocated with a budget to advertise the jobs/ new initiatives or positions. Instead of advertising the jobs or programs start spending on building a brand that people opt for. Use the following effectively

  1. Company’s face book page – start updating the job positions, work life at your company, why some one should join your organization. Make use of apps like My parichay / Work for us
  2. LinkedIn page – Your company’s page status updates, also ask your employees to share jobs, status updates
  3. Similar with twitter or any other social media platforms – Remember your employees are your brand ambassadors.
  4. Create a buzz in the market. Plan it during the peak hiring season
  5. Career page – A free branding platform. Update it. Make people excite about the life at your company

Campus Hiring

Analyze your campus hiring strategies. You need not hire every year travelling pan India. Instead use options like

  1. Pool campus model
  2. Internship model

Which will decrease not only your hiring costs but also allows you to reach larger pool and talent.

Job Drives / Travel costs of candidates

Prefer virtual hires rather than physical drives. Use mediums like google hangouts and skype effectively.

Employee Referrals

Promote employee referral schemes which will bring down lot of other costs however also keep a check on referral pays by the following ways

  1. Reduce money paid and increase gifts/ benefits like vouchers, coupons
  2. Introduce like Lunch with vertical head/ CEO
  3. Introduce a electronic mail with referral stars.. remember money is not the only motivation to employees

Third party agency fee/ consultant fee

Have a strong and efficient sourcing team. Prefer talented guys in the team rather than entry level graduates which can reduce consultants involvement to close the position. Keep trying new consultants if feasible to reduce dependency. Encourage referrals and use social media effectively to close critical positions rather than consultants. Don’t forget your internal employee champions who can be promoted if possible.

Also start implementing the below

  1. Use online method to screen candidates ( video interviews, Psychometric tests ) both for campus hiring/ lateral hiring/ entry level hiring
  2. Protect your talent pool – don’t just dump the data after a position is closed. Use it – reuse it.
  3. Use technology and social media extensively and effectively
  4. Use your career website proficiently

Internal Costs

Recruiting Staff

Use methods like closing time effectiveness. Award recruiters who excel in the same. Analyze your needs and reduce the staff if necessary. Audit your recruitment process.

Sourcing Staff

Measure the sourcing effectiveness regularly. Have a check on the team. Reduce the consultant hiring ratio. Reward the performers. Source internally.

L&D for recruitment

Spend here. Train them. Take help of your job board vendors for effective use of platforms say it Naukri/monster/CareerBuilder/ shine. Also remember don’t overspend too. Teach your employees how to use their network.

Non Labor Office costs

Promote green environment in office.

Before ending this blog just remember the following lines quoted by Jim Rohn

“If you are unwilling to risk the unusual, you will have to settle for the ordinary “

Krishna Vamsi A. is the Talent Acquisition Partner – University Relations at ING Vysya Bank Limited. You can follow him on Twitter @krishna5115

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Topics: Talent Acquisition, #TalentMinded

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