Cost-per-hire and back office: areas that trip up recruitment agencies

November 24th, 2019 | Industry News

Understanding cost-per-hire (CPH) is vital if any recruitment consultancy is to master and improve its internal metrics. Cost per hire includes all the financial expenses that relate to successful recruiting for a role: travel, fees, advertising spend, time etc. but doesn’t include induction and training costs. If costs per hire are too high, there are problems with the recruiting process itself and evaluating CPH allows you to identify your team’s successes and failures.

Industry costs – the hidden costs of recruiting

In 2017, one research programme calculated that it cost an average of £11,000 to replace a UK employee earning around £28,000. That’s a huge amount for the average organisation. CPH also varies from sector to sector, recruiting for healthcare tends to average around £7,000 whilst manufacturing recruitment runs to £8,500 to £10,000. This is partly related to salary – higher salaries tend to lead to higher CPH, but also because the greater the specialism, the greater the recruitment cost. Location matters too – companies in big cities tend to have lower recruitment overheads than those in rural areas where costs include more travel expenses, more widely spread advertising and maybe even higher salaries to attract candidates.

Recruitment Software that helps with CPH

Recruitment agency software that automates many recruitment processes is a great way to reduce CPH, applicant tracking system UK slims administration and tracks candidates throughout the recruitment process, automates follow-up communications and even sends reminders about issuing invoices and finalising paperwork. Recruitment CRM software also helps identify your best applicant sources so that you can focus spending on the most effective places. Tracking CPH also gives you insight into interview expenses and can reveal whether you need to invest in training seminars for consultants whose conversion rate is lower than others – maybe they have unconscious biases or need to work on their interviewing skills. The best recruitment CRM is a powerful reporting tool that helps your agency understand where it performs well and where improvements must be made.

Back office v CPH for recruiters

There’s an overlap between back office and CPH, especially around administration: paperwork and payment chasing can all add to CPH but are actually back office functions. Keeping your organisation too lean can lead to losing track of timesheets and expenses whilst overstaffing in the back office cuts into your margins. Technology is the answer and recruiting software that takes responsibility for many of these tasks is a boon. Not only that, but online recruitment software means that back office functions can be completed in what would otherwise be down-time – during commutes, for example – which allows for better focus on income production.