Factors to Consider When Calculating Your Cost Per Hire
When starting the recruitment process determining how much exactly your cost per hire will be is an important factor but so is your quality of hire. The wrong hiring decisions will wind up costing your company even more. With the current state of economy it is important that you are able to take the time and effort to hire top talent that will add value to your company while doing so at an affordable cost. Calculating this cost will vary depending on the way you choose to approach it.
Some companies choose to have their in house HR department in total control of recruiting. They are in charge of taking care of every task in the process and in addition the company is faced with a number of costs associated with recruitment. Some of the important factors to take into consideration when calculating cost per hire with this approach are:
- · Job fairs, college recruitment, advertising, and job board posting and access costs.
- · Hardware that needs to be added in for candidate screening, from computers, to resume
search programs and phones - · The costs associated with marketing open positions
- · All training, on boarding and turnover expenses
- · Travel costs
- · Recruiters and managers salaries
HR departments are often faced with a heavy work load and the recruitment process demands a lot of invested time in order to find the best candidates for each position. In order to allow them to focus on their core responsibilities that will continue to keep the business moving forward, a company often chooses to outsource their recruiting. They do so through either a contingency or recruitment process outsourcing (RPO) agency. With a contingency recruiter they charge nothing until the position is filled but many find that this approach can be expensive for their company, costing anywhere from 15-30 percent of those hired salaries.
The companies who chose to partner with an RPO agency have found that they are able to get ahead of the competition using the specialists with the experience and the tools to find the best candidates to fill their positions. A 2009 study conducted by the Aberdeen Group found that 62 percent of the organizations that they surveyed who had used this outsourcing approach were able to significantly reduce their cost per hire while hiring valuable candidates for their company. RPO providers, such as Hire Velocity, have the ability to drive down recruiting costs for companies by as much as 50 percent. As an RPO agency Hire Velocity offers to do as much or as little of the recruitment process companies they partner with need. The Aberdeen Group study of roughly 200 companies also revealed that 77 percent of those who were using RPO were happy with the results and would recommend it to others. Outsourcing with an RPO agency provides results of hiring quality candidates that will add value to your company as well as have results that will significantly reduce cost per hire.
Avoiding risks when using social media in recruiting
Over the past few years, the popularity of social media has continued to increase. Not only are well known sites like Facebook and LinkedIn expanding with each new active user, but entirely new social networking sites continue to be created. These websites have evolved from their original purpose as a social connector with friends, to a valuable tool in a company’s recruitment process. Recruiters have been learning more ways to strategically use these sites in getting ahead of the competition, but in doing so they can find themselves at risk of legal question in comparing the information accessed online in relation to their hiring decisions.
A simple Google search of a candidate’s name or a visit to their Facebook and LinkedIn page can reveal a lot about the person, providing an inside look into their life that you normally wouldn’t see on traditional job applications and resumes. In a January 2010 report released by Microsoft, 79 percent of those hiring managers they had surveyed used social media and online searches in their hiring, and of those, 70 percent had actually chosen to reject candidates because of the information that they had found. Knowing how to use these websites efficiently without accessing information that could lead to possible discrimination claims is crucial in the hiring process. With all of the available information at your fingertips, it is important that when choosing to integrate social networking sites in the screening of a candidate that the search remains relevant and nondiscriminatory. Recruitment agencies that set up a policy to follow standards set up by organizations such as the Fair Credit Reporting Act for screening candidates will have effective results. They also will avoid any future legal question that could arise finding that them guilty of violating laws such as the Title VII of the Civil Rights Act or others created to prevent discrimination in hiring.
In order to keep recruiting fair and avoid any question of a hiring decision there are a few key things to remember and techniques to have in place before searching the web. Establishing a strong recruitment policy along with prior education of these guidelines to those in charge of screening candidates (preferably someone who is not making the hiring decisions) is important. Making sure that these policies include what information can and cannot be included in making hiring decisions is vital in addition to creating a set list of what websites are to be used in accessing this information. Using social media to look into one candidate and not others puts recruiters in a questionable situation. If you choose to use social media to look into one candidate, it’s important that it is done with all others as well. Lastly, keeping documentation of all information to reference back to what was used in the recruitment process will be greatly beneficial to the company should any questions arise.
Social media is very valuable in the recruitment process when used correctly and integrated along with other screening tools. It has the ability to locate a large amount of possible candidates as well as provide valuable information. Those recruiters who are able to keep up with consistently changing social networking trends and have a strong knowledge of how to navigate these sites, position themselves above others; finding the best candidates possible, while staying clear of any potential discrimination claims.
Companies Struggle in Hiring for Critical Job Positions
A recent survey has found that companies are having a tough time finding employees that have the right qualifications to hire for their most critical positions. Lack of experience and technical skills, were highlighted as the major reasons why roughly 52 percent of U.S companies have found themselves in a difficult position when it comes hiring.
As the economy continues to improve and the market is getting more competitive, not only are employers increasing their hiring, but the role of finding the most qualified candidate for the position has become more crucial then ever. Recruitment Process Outsourcing (RPO) is something that should be considered in ramping up hiring efforts. RPO is able to give companies that step up above the competition. Through the use of various tools and strategies an RPO provider can find the most qualified candidates fast and effectively for critical jobs such as skilled trades, engineers and IT staff that have been found as the hardest to fill. In a previous blog “An RPO SWOT Analysis”we discussed the importance of choosing the right RPO provider. It’s important that when making this decision a company takes into consideration the different aspects mentioned in this analysis. Choosing a provider that is able to meet a company’s needs will present them with qualified candidates to hire for these hard to fill job positions
Cogliano, J. (2011, May 20). Employers struggle to fill critical jobs. Austin Business Journal, Retrieved from http://www.bizjournals.com/austin/news/2011/05/20/employers-struggle-to-fill-critical-jobs.html?ana=e_vert
CEOs expect hiring to pick up
The Conference Board released a survey last week showing a significant change from last year’s survey. According to this year’s survey, half of all CEOs expect to see increased hiring in their industries. This number is up from 30 percent just one year ago. Not only that, CEOs who expect a decrease in hiring fell to 16 percent in the first quarter, 6 percent lower than a year ago.
The CEOs surveyed by The Conference Board are optimistic about the future, with 85 percent saying conditions are better than six months ago. This number is up from 56 percent who said so in fourth quarter of 2010.
This optimism by the surveyed CEOs demonstrates how the industry leaders believe that current economic conditions seem to be improving. This is great news for the unemployed, as it seems more opportunities will be opening up this year.
“CEOs: Hiring to Pick Up.” Crain Communications Inc. (2011): n. pag. Web. 11 Apr
2011. <http://www.staffingindustry.com/ME2/dirmod.asp?sid=&nm=&type=MultiPublishing&mod=PublishingTitles&mid=6EECC0FE471F4CA995CE2A3E9A8E4207&tier=4&id=F2C348ED0A7B48ACA0ED4BEF2E44EDE2>.
Using LinkedIn to recruit graduating college students
LinkedIn is a popular social network among professionals and college students. While Facebook is more for personal use, LinkedIn allows professionals and college students to showcase their experience. With over 90 million members, recruiters are finding this social network as a useful tool to find qualified professionals or graduating students to source for potential jobs.
LinkedIn is growing each and every day. In fact, one million new members join the social network every twelve days. More than one million companies have created LinkedIn Company pages, and that number keeps on growing (Buss). It is a growing trend for recruiters to use social networks, such as LinkedIn, to look for professionals to fit their job description.
Hiring graduating college students for entry-level positions is easy with the growing number of students joining the website. The chart below shows the rapidly increasing number of student memberships.
Hire Velocity uses LinkedIn, in addition to over 200 job boards, to source for candidates. Make sure to check out our LinkedIn page.
Buss, Jason. “College Recruiting on LinkedIn.” Talent HQ (2011): n.
pag. Web. 18 Mar 2011. <http://www.talenthq.com/2011/03/college-recruiting-on-linkedin/comment-page-1>.
Generation Y: Taking Over the Workforce
Generation Y is starting to enter the workforce and there are a lot of them. In fact, there are more than 80 million, which is bigger than the Baby Boomers generation (Gronbach)! But what is Generation Y? They were born between 1985 and 2005, are very green, humanitarians, and do not see color.
Generation Y is flooding the labor market and may face 50% unemployment (Gronbach). This high unemployment rate will force many in this generation to create small businesses to make up for the lack of jobs. Many of the Baby Boomers are starting to retire, leaving many technical positions open. To fill these in demand jobs, Generation Y males are increasingly going to technical schools, hoping to find a high paying position. You can also expect more women to be leading and running companies. Right now, women outnumber men in college at a 60/40 ratio (Gronbach).
Gronbach, Kenneth. “The Age Curve.” CEO Council of Tampa Bay. Tampa, FL. 10 March 2011. Lecture.