COST PER HIRE

Track recruitment process

Cost- benefit analysis

SIGNIFICANCE OF COST PER HIRE

Recruitment Process effectiveness

HR budgeting

Track recruitment process

Cost- benefit analysis

1. Track recruitment process We follow a procedure to recruit employees. However sometimes the process goes dismay at times in documentation or tracking of the candidates. But when we are into calculating cost per hire we have to adamantly keep record of the process as it will lead to the calculation of the cost of the recruitment system of the HR department. Any deviation in adherence to the process will effect the overall cost of the recruitment process. 2.Cost Benefit analysis To calculate the overall cost of a hire we have to keep record and also calculate the aspects involved in the hire which bears cost. Thus during evaluation in the later stage we can analyze which aspect in the recruitment is involving more costs to the system. Thus accordingly we take actions in the aspects which is bearing more cost to the system

Recruitment Process effectiveness

HR budgeting

Track recruitment process

Cost- benefit analysis

3.Recruitment Process Effectiveness Hiring costs represent a significant portion of HR expenditures, particularly when the effects of turnover are considered. For example we can analyse the sources which involves this turnover. It is always wise to watch costs and have a program of continuous improvement, ensuring that the money we are spending are on the things that make sense and pay off. It is important to measure what works and doesn't work as rigorously as we can 4.HR Budgeting After a few months of cost per hire analysis the HR department will be in a position to be more realistic in the figures required for recruitment and thus leading to a more specific budget for the department and work on other areas of the department.

Recruitment Process effectiveness

HR budgeting

Track recruitment process

Cost- benefit analysis

Procedure For Tracking to calculate CPH

Calculating cost per hire is to be from the very first day of the recruitment procedure. Thus a tracker in Excel format has to be prepared for easy calculation with the headings to discussed in the following slides with its importance and usage

Recruitment Process effectiveness

HR budgeting

Track recruitment process

Cost- benefit analysis

Candidates Name
The candidates name column should include only those candidates who has been short listed by the Head for interview, otherwise it will be huge data base. In a different sheet all the candidates who have been contacted for the requirement whether interested or not, whether short listed or not to find out how many candidates were contacted for the position

Position
In the next column the position for which recruitment is done should be maintained. It will help to analyze which position has incurred how much cost in hiring. Rigorous actions can be taken to cut down on the expenses in the areas which has incurred cost for the position.

Recruitment Process effectiveness

HR budgeting

Track recruitment process

Cost- benefit analysis

Mode of Sourcing
Mode of sourcing is an important aspect for calculating cost as this decides on the internal and external cost like Employee referral and job sites and advertising, consultancy and campus advertising for candidates respectively. This will enable us to compare and decide which involves more cost and decide the best source for the system.

Infrastructure Cost
At the onset what does infrastructure cost include? It includes the cost which are not easy to track but also incurs a huge cost like the telephone cost. It is not easy to track telephone cost as it will involve a huge amount of time but it does incur cost. Thus calculating the average amount of calls made to a candidate ranging from sourcing call to call made till joining is done on the basis of minutes and the rates charged for the same. A chart is prepared which is included accordingly during the cost calculation of the hire.
Recruitment Process effectiveness HR budgeting

Track recruitment process

Internal Recruiters Cost

Cost- benefit analysis

The most important and complicated part is to calculate recruiters efforts in terms of money. The recruiters effort is turned to cost in the following way. Firstly we need to work on the number of days a recruiter works on to complete a position. To calculate the days we firstly need to calculate how many hours in a day we put into recruitment. For Example we put 2 hours per day in recruitment. Then we have to multiply the hours with the working days. For example: 26 days * 2 hours = 52 hours(=2 days)/ month. Thus recruitment for a position has to end in 52 hours i.e. 2 days. This will be the average no. of days

Then we have to calculate the average salary of the number of recruiters involved in the position. If 2 recruiters are involved in closing a position with Rs5000 and Rs12000 salary respectively, then the average salary will be 5000+12000/ 2 = Rs8500 Finally we have to put the number of days and average salary of recruiters to the formula for calculating Internal Recruiters Cost i.e. Salary of recruiters * Number of days / No. working days
Recruitment Process effectiveness

8500 * 3 days / 26 = Rs. 980 per position

HR budgeting

Track recruitment process

Cost- benefit analysis

Reimbursement Cost
In some positions we need to call the candidates from out station, which will involve further cost like his travel cost and lodging cost which is also included in the calculation of the cost of the hire

Relocation Cost
If we recruit an employee for a demographic region other than where he is, we have to give relocation allowances to the concerned employee like traveling cost including family, accommodation cost for a few days and also shifting cost which easily bears a hefty amount to the recruitment system

Recruitment Process effectiveness

HR budgeting

Track recruitment process

Cost- benefit analysis

COST PER HIRE

Now to calculate the cost per hire we have to add up all the cost and divide it by the number of hires in the pre-defined time period i.e. Mode of sourcing + relocation + recruiters salary + reimbursement + infrastructure Number of hires in the pre defined time

Recruitment Process effectiveness

HR budgeting

Track recruitment process

Analysis and Evaluation

Cost- benefit analysis

At the initial few months the CPH tracker would seem to be just another data entry with no value addition to the department. But the actual analysis would come only after a few months of hiring. The CPH tracker would reflect the following: By default it would show the cost incurred in a hiring. Besides that we can also analyze which source of recruitment is more expensive. We can also analyze which source brings in the stable manpower which has the highest turnover. It can also be taken in position wise showing which position's recruitment is incurring higher cost. We can also do the recruitment in the pre-defined time period. If the position is not closed in that time we can analyze what are factors causing the delay and lead us to take necessary actions to gear up the recruitment procedure.
Recruitment Process effectiveness HR budgeting

Track recruitment process

Cost- benefit analysis

Conclusion
Thus it is not complex to calculate the CPH but it only requires most systematic and focused tracking and the result will be many from evaluating the system in figures, the effectiveness of the procedures and also our future actions of budgeting

Recruitment Process effectiveness

HR budgeting