Entry for October 17, 2006
The Total Cost of Hiring
Some employers estimate that an employee who leaves before a year is out will cost the company three times that employee’s annual salary, and does not factor in the cost of having the position effectively vacant until a productive individual can be found.
A recent report issued by the Corporate Leadership Council pegged the cost of losing a high tech worker at $123,000. In another survey conducted by Development Dimensions International, the average replacement cost for an executive vacancy was estimated to be approximately $750,000.
Recruiting metrics are the building blocks upon which recruiting decisions, strategies, and plans are built. Without these items, it is impossible to develop a meaningful recruiting strategy or determine the effectiveness of that strategy.
Companies commonly rely on the following standard measurements of recruiting effectiveness:
Source distribution: Number of job applicants and new hires per recruitment source.
Time-to-fill: Number of days between when a new job requisition is opened and when a candidate accepts an offer.
New-hire quality: A performance assessment conducted during an employee’s first 90 to 180 days on the job.
Customer Satisfaction: refers to the average hiring manager rating.
Recruiting Cost Ratio: requires figuring out the total recruiting costs, and then dividing by the total compensation recruited. Total recruiting costs are determined by adding up four cost areas:
• Fixed-overhead recruiting expenses
• Sourcing-advertising, recruiting fees, Internet-posting expenses
• Signing bonuses
• Travel, relocation, visa expenses
The sum of these four areas equals total recruiting costs. Total compensation recruited is the sum of the annual base starting compensation of all external positions filled by recruiting. Once you've come up with these two figures, the recruiting cost ratio can be calculated by using the following equation:
Recruiting Cost Ratio=Total Recruiting Costs/
Total Compensation Recruited
Recruiting cost ratio replaces the more traditional and commonly used cost-per-hire metric. It takes into account more factors that affect cost, such as geographic differences, industry differences, functional differences, and differences in job level.
Some employers estimate that an employee who leaves before a year is out will cost the company three times that employee’s annual salary, and does not factor in the cost of having the position effectively vacant until a productive individual can be found.
A recent report issued by the Corporate Leadership Council pegged the cost of losing a high tech worker at $123,000. In another survey conducted by Development Dimensions International, the average replacement cost for an executive vacancy was estimated to be approximately $750,000.
Recruiting metrics are the building blocks upon which recruiting decisions, strategies, and plans are built. Without these items, it is impossible to develop a meaningful recruiting strategy or determine the effectiveness of that strategy.
Companies commonly rely on the following standard measurements of recruiting effectiveness:
Source distribution: Number of job applicants and new hires per recruitment source.
Time-to-fill: Number of days between when a new job requisition is opened and when a candidate accepts an offer.
New-hire quality: A performance assessment conducted during an employee’s first 90 to 180 days on the job.
Customer Satisfaction: refers to the average hiring manager rating.
Recruiting Cost Ratio: requires figuring out the total recruiting costs, and then dividing by the total compensation recruited. Total recruiting costs are determined by adding up four cost areas:
• Fixed-overhead recruiting expenses
• Sourcing-advertising, recruiting fees, Internet-posting expenses
• Signing bonuses
• Travel, relocation, visa expenses
The sum of these four areas equals total recruiting costs. Total compensation recruited is the sum of the annual base starting compensation of all external positions filled by recruiting. Once you've come up with these two figures, the recruiting cost ratio can be calculated by using the following equation:
Recruiting Cost Ratio=Total Recruiting Costs/
Total Compensation Recruited
Recruiting cost ratio replaces the more traditional and commonly used cost-per-hire metric. It takes into account more factors that affect cost, such as geographic differences, industry differences, functional differences, and differences in job level.
2006-10-17 10:03:55 GMT
