Consider this scenario: Sarah, a potential candidate, has just found her way to your career site. She's interested in learning more about your company but isn't quite ready to start the application process. Where does she go from here? Most likely, she’ll turn to Google to conduct further research, and you will never get a chance to capture her name, let alone her email address, phone number, or resume!This is just one scenario that contributes to the ever-increasing expenses involved with your cost-per-hire (CPH). If you want to build a more efficient and effective recruitment marketing strategy, you have to understand cost-per-hire and how you can reduce yours.In this post, we:1. Break down the official definition of cost per hire (CPH)2. Apply CPH to a real-world scenario3. Discuss a strategy to reduce your university recruiting CPH by 30 percentUnderstanding cost per hireCost-per-hire measures the costs associated with sourcing, recruiting, and staffing activities that are completed by an employer to fill an open position in the organization. CPH is a ratio of the total dollars spent to the total number of hires in a specified time period.As a formula, cost per hire looks like this: Cost-per-hire = (External + internal costs) / Total number of hires within a time period(Source: NACE's Professional Standards for University Relations & Recruiting) Let's codify the point with an example Your most recent recruiting season just came to a close. Congratulations—you were able to fill all 25 open positions! And you did it in four months. Now, let's look at the numbers to see how effective you were with your resources.
First, the external costs you spent include:
• Resume books
• Career fair fees
• Travel costs
• Information sessions
• Equipment rental or purchase
• Printable handouts, swag, etc.
• Career service/faculty relations programs
• Costs to host company visits for potential candidates
• Third-party recruiting services
• Third-party job boards or social media networks advertising and listing fees
Let's say you spent a total of $30,000 on these items.
Now, let's look at your internal costs.
This would be any combination of:
• The fully-loaded salary, benefits, and professional development of your recruiting team (in our scenario, this would be prorated to four months)
• Cost of creating your recruitment marketing content
• Cost of building and maintaining your career website
• Time of other associates spent to interview candidates
And that’s just to name a few of the internal costs.
All told, let's say your internal costs add up to $70,000.
Adding up the external and internal expenses brings us to $100,000 spent over the four-month period. When you spread out $100,000 more than 25 hires, you're looking at a CPH of $4,000.
Whoa, guys... that seems a bit lofty. (Source: your initial reaction)
I get it. When I first tried to wrap my head around an organization actually spending $100,000 to hire 25 people, I just about fell out of my chair. But this represents a very real situation for a majority of corporations recruiting from colleges and universities. The National Association of Colleges and Employers' 2016 Recruiting Benchmarks Survey Report states the average CPH for on-campus recruiting is actually $4,999. And if you ask the Society for Human Resource Management, the average cost per hire is $4,129.
Side note: In my personal observation and research on CPH, it's obvious that the market is still trying to settle on a best practice for calculating CPH. How do I know this? Because almost every study has a disclaimer that mentions the disparity in the way CPH is calculated among participating companies. I'm assuming many of you will read this, see the $4,999 CPH number, and begin to compare your own results to it, feeling either comfortable or panicking in the process. While this is a worthwhile exercise, I would highly encourage you to measure your current CPH vs. past years’ CPH. To do so effectively, you'll need to maintain consistency with the way you document and categorize your expenses. If you have someone on your team who is decent at doing personal taxes, that person will be a powerful asset for you.
Let's take a step back from the ledge and try to understand how your CPH can add up so quickly.
More isn't always better
We'll begin with the sheer volume of applicants that many recruiters force through a sorting process. The traditional rule of thought is fairly simple: get more applications, hire more people. But are you doing yourself any favors by attracting irrelevant applications? Nope.
According to ERE Media, a recruiter will review an average of 250 applications for one corporate position. Think about your own recruiting processes. Sure, if you're attracting 250 relevant applications for every open opportunity at your company, then you are doing something right. But the data suggests that not all of the resumes you thumb through are relevant. How do we know this? Well, Ladders did a study in 2012 that found most recruiters spend about six seconds looking at one resume. It's pretty simple to connect the dots on this one. It only takes you six seconds to scan a document and determine it's not relevant.
Attracting irrelevant applications is costly.
Consider Marketo's Director of Talent Acquisition, Carl Sweet: It all started when managers and executives kept asking me, “How many people do I have to interview for this job?”
After digging into the data of his company's recruiting and hiring processes, he landed on an ideal number of candidates and interviews. The ratio for Marketo: 80 candidates (or viable applicants), eight interviews, one hire.
Think about that. Only 10 percent of the candidates that Marketo is attracting is even worth inviting for an interview. Said another way, if your recruiting team spends just 30 minutes per candidate exchanging emails, addressing initial candidate questions and scheduling (or rescheduling) a screening call, then it will effectively waste 36 hours on irrelevant candidates to find one successful hire.
Apply that to our scenario above, and here's how the math shakes out:
25 hires = 200 interviews = 2,000 candidates = 900 hours spent on irrelevant candidates
And that's if you're operating at peak efficiency, in line with some of the most effective recruiting teams in the world.
But let's remember that your internal time spent interviewing and following up with applicants is only a small portion of the costs. Go ask your recruitment marketing team how much it costs to create the amazing content you're leveraging to attract new applicants. Or ask your web team to list the costs associated with building and maintaining your career site. Then there are all the external costs we listed above.
I won't spell out scenarios for each of these items. NACE did the research and packaged it up neatly in various benchmark reports.
Using Content to Reduce CPH by 30 Percent
I had a conversation with a campus recruiting team that hires approximately 350 full-time employees from its internships each year. The team also told us that it sees a 2 percent conversion rate from the total number of students it attracts to its full-time hires. Quick math tells us the team attracts about 17,500 students to its brand. Think of all the questions, the e-mails back and forth, the resumes, the letters of recommendation, etc. All told, the team estimates that it spends about $1.4 million to hire those 350 employees.
There's an amazing opportunity for recruiters to reduce their CPH by a significant margin. In fact, companies who are hiring from universities can reduce their CPH by 30 percent through the power of content. Let's break it down.
They're all asking the same questions.
Consider the last round of candidates you interacted with. How many of them asked a variation of a question you've answered hundreds of times before?
Research from Collegefeed shows a significant majority of college students really only pay attention to six key aspects of your company when conducting their career discovery:
1. People and culture fit
2. Career potential
3. Work-life balance
5. Challenging environment
6. Company mission
To illustrate the point, I'll refer back to my first campus career fair at University of Missouri. It was packed. The energy was high, and the students looked sharp.
There was one point in the day where our line was getting long. We had about 25 students who all decide to learn more about Better Weekdays at the same time. After the fourth student had asked me the same two questions ("What do you guys do?" and "What will I do as a marketing intern?"), I decided to invite the entire line around to form a semicircle around our booth. The conversation immediately became a community discussion. I didn't have to repeat myself, and they all learned more together than on their own.
Content can accomplish the same thing. Take note of the questions students are asking your recruiting team, and create content to address those questions.
Content never sleeps.
One way content reduces your CPH is by addressing the FAQs that job seekers will almost always have—even when they're up at 1 a.m. conducting their search. Take the time to meet with your recruitment marketing team and audit your content. Do you have content that addresses the six most popular areas of curiosity?
Here are some questions to help you get started:
1. Do we have any employee testimonials about our team?
2. Do we have stories about employee growth and advancement?
3. How do our team members feel about their work-life balance?
4. Are we transparent about our compensation packages?
5. What success stories can we share about serving our customers?
6. How do we connect the corporate mission to each position in the company?
7. If you need a hint, our research shows students love to consume content about a day in the life of an employee and content about the skills they need to acquire. Simply stated, they want to know what they'll be doing and how to make themselves more marketable to your organization.
Content gets personal.
Content also reduces your CPH by attracting a more relevant candidate for your opportunities. This means your recruiters spend less time with irrelevant candidates, and less time with irrelevant candidates translates to a more effective use of time. And in this case, time is money.
The best recruitment marketers understand their content is positioned for success when it's targeted to an audience that:
1. Aligns to the opportunity
2. Will engage with the content
Recruitment marketers achieve this through the power of a well-defined candidate persona. Candidate personas are semifictional representations of your ideal candidate that go beyond the skills you would typically list in a standard job description. Building an effective candidate persona includes a list of competencies, aspirations, values, qualifications, and cultural preferences.
Once you have your ideal candidate in mind, you can:
1. Create content that will resonate with that candidate.
2. Target your content specifically to candidates who are aligned with the persona.
Content is sharable.
Another way content can reduce your CPH is by boosting the reach of your employer brand. Students (and people, in general) love to share relevant content. "Why do People Share Content?" lays out the reasons people share content and how you can use this to your advantage.
The takeaway here is that people share for a number of reasons, but one of the most compelling reasons we share content with our networks is because we think it adds value to the people in our lives.
The best recruitment marketers create content that:
1. Tells a compelling story
2. Resonates with a clearly defined candidate persona
3. Is easy for most everyone to consume and share
Your recruitment marketing content can reduce your CPH by 30 percent because it:
• Addresses the most popular topics, which saves you time because you don’t have to answer each question
• Answers FAQs for you 24/7
• Attracts relevant candidates for your company or job opportunity, reducing the risk of wasting time contacting irrelevant candidates
• Decreases the number of applicants dropping off, further reducing the risk of wasted time
• Encourages people to promote your employer brand and opportunities, enhancing your reach with the most powerful form of marketing — word of mouth
It won't happen by accident.
Chances are you're sitting on a treasure trove of good content. When I review inbound recruiting strategies with our clients, they rarely need help creating new content to attract, engage, and hire new candidates. More often than not, the problem is content distribution. Your career site is a fantastic resource of good content. But do you remember the philosophical question, "If a tree falls in a forest and no one is around to hear it, does it make a sound?" Apply this to your content distribution strategy. If you create great content, but no one sees it, does it really exist?
Take your content to the people. When potential candidates do hit your career site, make it easy and interesting for them to give you their information to learn more. Then, with a timely and personal approach, begin to nurture them, each according to their unique engagement with your content. This is the level of personalization required of an effective candidate nurturing strategy. The end result? An informed, relevant, and excited applicant who pursues your interview process with vigor and confidence. I can already hear the praises from your hiring managers.