5 tips to efficiently reduce the cost per hire

Businesses regret around 46% of their new hires. Some don’t match the skills they’re looking for and some don’t fit into the company culture.

Moreover, the average cost of hiring a new employee is estimated to be around $4,100. As your business grows, hiring new people starts getting complex.

You want to hire the most skilled and suitable candidates but you also don’t want to misspend your time and resources only to hire the candidates that don’t fit the job role.

We’ve come up with a handy guide to help you reduce your cost per hire by making your hiring process compact and proactive. Read on to know more.

5 tips to efficiently reduce the cost per hire

As the name suggests, cost per hire refers to the amount of money an organization spends on hiring every new employee. While the average cost per hire is estimated to be around $4,100, it might be more or less for your company.

To take steps toward reducing your cost per hire, you first need to calculate what the actual amount is. Then you shall look at various ways of reducing it. The goal shall be to create a system that benefits both you and the candidates that interact with your firm.

Given below are some effective ways to reduce your cost per hire and hire the most suitable candidates for your company with ease.

1. Invest in pre-employment tests

HR leaders list skill gaps as the most prominent challenge when it comes to hiring new talent. Companies end up hiring people that don’t match or fit into the skill set they need for a job role. This is where pre-employment tests come in.

Pre-employment assessments refer to the process of collecting relevant information about job applicants and matching it with their hands-on skills to make informed hiring decisions. They test out how the employees will perform the job before hiring.

In simple words, pre-employment tests are auditions for jobs that test a candidate’s skills concerning the role the company needs them to perform. You can create pre-employment tests for any skill set and job role of need.

C++ programming pre-employment tests will test and rate a candidate’s ability to work with C++, helping you decide whether they’ll be able to take the workload and responsibilities. Similarly, a grammar test will help you deduce a candidate’s written English.

2. Create a potential candidate persona

We have talked about knowing what your actual cost per hire is to be able to reduce it. Similarly, you need to know what kind of an employee you’re looking for or you’d want to approach people who fit the criteria and skip ones who don’t.

In simple words, you need to know who you’re looking for to understand who you want and who you don’t. Creating a candidate persona helps reduce your cost per hire by significantly narrowing your search bracket.

For instance, if you’re looking for a copywriter, you shall decide in advance what background, skill set, personality, and experience you’d want. Say, you want someone who has over three years of experience with expertise in digital marketing.

This way you’ll be skipping candidates that don’t have at least three years of experience and haven’t dabbled in digital marketing. Doing so eliminates unsuitable employees and helps you create a foolproof hiring plan.

3. Automate the process

Finding the right talent depends on having an adequate pool of candidates and their correct testing to see who fits your requirements best. This is arguably an elaborate task to undertake and recruiters often veer off or let their personal interests interfere.

Automation of the process helps you eliminate unnecessary tasks while leaving room for spending more time on tasks that require personalized input. Automation helps reduce cost per hire quite drastically by simplifying things.

You’ll be able to see its benefits right away. By reducing and optimizing the steps you take in the process, you automatically reduce the time, effort, and resources you spend on it. A shorter process can also be repeated more often.

To bring automation into your hiring system, begin by thoroughly assessing your entire process. See what procedures require minimal effort and how they’ll affect the entire process of automation. Focus on the following three aspects to achieve optimal results:

4. Set channels for searching

Decide on what channels you wish to use for searching for candidates. You might be using an already created talent pool of yours to pick candidates or you might be searching public portals such as Indeed on LinkedIn.

Evaluate every mode you use to select the most successful out of them. Say, you chose social media recruitment, Indeed, employee referrals, and your in-house talent pool as they’re the most effective modes and left out college recruitment as it had not bought in the results.

The idea is to decide on some set channels of recruitment and hit them up whenever you have a vacancy. Having your most successful avenues as your go-to options will likely result in you finding a suitable batch of candidates quicker.

That said, you should always be open to newer recruitment tactics and see how they fare. Newer tactics such as social media recruiting are fast becoming popular. 92% of companies in the US are making efforts to recruit through social media.

5. Shortlist a reasonable number of candidates

Another important aspect that impacts the recruitment process and also slips unnoticed in the pool of candidates recruiters collect. It is a common misconception that the larger the pool, the higher your chances of finding a suitable employee.

This is simply not true. Having an absurdly large group of candidates for a position doesn’t necessarily guarantee success. What it definitely does is lengthen the process. You have to go through a large number of candidates via resumes, tests, and interviews.

The opposite isn’t the solution either. By selecting a very narrow pool of candidates, you restrict your chances of finding a suitable one. The solution is to select a reasonable pool of candidates.

The pool shall be large enough to allow you to reach and find different types of people. And it shall be small enough that you’re able to screen all the candidates properly and give every candidate the attention that’s required.

6. Test/interview in bulk

Another way to automate the hiring process is to test and interview a bunch of candidates at once. With the rise of digitization, this has become quite easy to do as well. You can now conduct skill tests and exams for candidates online.

Create batches of students and screen them in rounds. Follow the same procedure for interviews as well. Conduct video interviews in batches to conduct group discussions with aspirants.

You might even go as far as to group candidates based on common skills or experience to give you a base for the interview. You’ll be able to ask common questions and judge the quality of the responses they give.

Conducting group tests, discussions, and interviews not only saves you time and money but also helps you test candidate personality and behavior when they interact with one another in your presence.

7. Encourage referrals

Employee referrals are some of the most cost-effective recruitment strategies. They refer to employees that are already working with you recommending candidates they know or deem suitable for existing vacancies.

Most companies usually have an employee referral program in place that rewards employees for recommending qualified candidates for open job roles. Encourage your employees to recommend candidates to earn rewards.

One of the biggest benefits of referrals is that candidates recommended are more likely to fit your company culture. This is because your employees already have a thorough understanding of it and since they know the candidate as well, they’ll know if they’ll fit or not.

8. Do more video interviews

Interviews are the last and arguably the most crucial step in deciding whether a candidate should join your company or not. They’re also highly personable. They’re best conducted with people present in the room physically.

However, with the rise of digitization recently, interviewing has also taken the necessary leap. Video interviews make interviewing possible and efficient even when the interviewer and interviewee are in different locations.

They’re far more cost-effective than in-person interviews and just as effective in helping you get to know a candidate. Prepare a list of questions or points to discuss to keep the interview on track and wrap it up in time.

Hiring is all about making efforts that are profitable over time

As your business grows, hiring new people starts getting complex. It is crucial to hire employees that fit the company. However, it is often a tedious process to find the perfect candidates. 

To reduce the cost per hire of your company, you need to first evaluate your existing structure. Identify places where you’re overspending and make an effort to curb them. Moreover, introduce automation to regulate repeating tasks.

Let us know in the comments what you think is the most efficient way to reduce cost per hire in a company’s recruitment plan.

Author bio

Atreyee Chowdhury is a freelance content writer with more than 10+ years of professional experience. She is passionate about helping SMBs and enterprises achieve their content marketing goals with her carefully crafted and compelling content. She loves to read, travel, and experiment with different cuisines in her free time. You can follow her on LinkedIn.

 

03/10/2022