Recruiting new talent is crucial for the growth of any company. New hires can bring in a refreshing sense of energy, unbiased outlooks, and unique approaches to any office culture. While every recruiter wants to find only the best for their business, they must find a way to do so without burning a hole in the company’s pocket. It is important for any HR department to follow the most efficient, effective, and especially money-conscious, hiring practices while drowning in piles of resumes and cover letters.
Sound impossible? Absolutely not.
Software Advice recently published results from their advertising cost-per-hire survey. After collecting 130 responses from recruiters and HR professionals in the United States, Software Advice analyzed the results to help determine what, on average, companies in North America are spending in advertising costs for each new hire they bring on.
The base of the survey started with a flashback to high school algebra. The cost-per-hire algorithm, created by the Society for Human Resources Management, calculates the average advertising cost-per-hire. Don't remeber this from school? Let us refresh your memory:
Once this algorithm was calculated for each participant, Software Advice arrived at three conclusions:
1. Companies spend, on average, $86 on advertising for each new hire
Spending money on advertising for new hires is extremely important to get your company’s name out there and to get top talent banging on your door. Whether it is through job boards, social networking sites, or attending campus recruiting fairs, HR departments need the proper funding in order to bring fresh talent into the company and keep the rate of employee growth on a positive slope.
In the study, approximately one-third of respondents reported spending less than $50 in advertising costs to recruit each new hire, while the vast majority of respondents (78 percent) spend less than $500. Therefore, if you are a HR professional or recruiter and you are spending more than $500 on your cost-per-hire, sorry to say that you are an outlier and may want to take a few notes on how to decrease your cost!
2. Small companies spend more on average for each new hire than large companies
Software Advice reported that the average cost of each new hire tends to decrease as the size of business increases. Companies with 1-50 employees averaged $320 per new hire, while companies with more than 5,000 employees averaged around $40 per new hire. Onboarding can be an extremely time-demanding project. It can cost up to 1/3 of an employee's salary to onboard and train new hires, especially when that employee's job description does not have to do with onboarding. Therefore, if a small company has a flawed onboarding plan, they risk having a bad retention percentage which can be extremely costly.
When it comes to advertising budget, generally speaking, the larger the company, the larger the advertising budget. This statistic makes sense, since larger businesses hire and onboard a larger number of employees than small businesses. Results showed that companies with 1-50 employees hired, on average, 13 new employees over the course of the past year, while businesses with 10,001 employees or more averaged 2,181 new hires.
These statistics aren’t meant to make small company’s start shaking in their boots. Small companies have a lot to offer that larger companies have a more difficult time providing. Take a look at startups. Startups, like UrbanBound, are becoming much more popular and attractive as career starting points for Millennials. They offer the opportunity to really network with your coworkers (since it is a small environment), foster your creative energy by having the ability to speak your mind, and actually be part of contributing to the growth of the company. So if you are a recruiter for a small company with a low advertising budget, don’t fret! There are thousands of Millennials out there searching for a company like yours.
3. 72% of respondents said job boards were a primary advertising channel for their companies
Today, technology is king and every department of your company must learn to adjust around that. Whether it is using software platforms like Hireology during the hiring process or implementing HR technology, both can increase your productivity and guarantee a return on your investment by helping you to easily find and distinguish the cream-of-the-crop candidates.
Job boards are the ideal destination for HR professionals and recruiters to post about position openings. When an individual is on the hunt for a new job, the first place they look at is a job board - seeing as its sole purpose is to seep through all of the open opportunities out there. Times are changing though, and there are numerous other platforms being used to advertise job openings. The report showed that social networking sites were the second most popular mean for advertising jobs.
Small businesses in particular should get creative with their job advertising through social media or guerilla marketing campaigns. Although they are dealing with a much smaller advertising budget than larger companies, there are many unique ways to attract talent that not only can save the company some money, but can highlight the company’s creativity and make it appear more intriguing to applicants. Need some inspiration? Check out how IKEA Australia brought in 4,285 applicants without spending even a dime.
Businesses must keep track of their cost-per-hire metrics in order to keep their office productivity level as high as possible. Consider hiring a web-based platform like UrbanBound to handle the relocating process so that your employees can focus on getting their jobs done.
The goal of every company should be to keep their turnover rate low and retention rate high. By paying attention to these statistics and making a focused effort on budgeting during the hiring process, this should not be a problem for your company.
Want to know more about how you can best improve your onboarding process? Download our eBook to get a welcome kit for your new hires!