Measuring the cost per applicant and cost per hire helps human resources departments determine the cost-effectiveness of their candidate recruitment strategies. This candidate data can be gleaned through a variety of methods. Once the statistics have been compiled, managers and human resources staff can then evaluate whether they’re getting their money’s worth, what strategies proved too costly and which efforts can be expanded upon.

Collection of Candidate Source Data

Begin by automating the candidate source data. This can be done within the human resources information technology (IT) department. An applicant tracking system can be implemented by the IT department and used to track basic data for each applicant, such as the source of his or her application or the website where the recruitment ad was placed. This data can then be analyzed by the human resources staff to determine the frequency of applicants from each source.

Data Analysis

Once reliable candidate source data has been gathered, managers can then begin calculating cost per applicant and per hire to determine the ROI. Use the automated program to run reports for “applicants by source” and “hires by source.” Other reports to run include raw applicant and hire volume. Compare these against the costs and fees charged by each source. Factors such as the hours spent by each human resources staff member or hiring manager may be difficult to calculate; however, these also add to the cost per applicant and per hire. Now, you know which of your recruitment ads and methods have produced the greatest ROI.

Making Adjustments

Knowing your ROI for each applicant and hire source allows you to make adjustments as needed. Because recruitment budgets may change on a quarterly or annual basis, you may need to adjust your recruitment media and marketing on a similar schedule. Once you have identified which source or sources are giving your organization the best ROI, you can focus your budget and contracts there. You’ll also have the data to show different recruitment websites and venues so that you can get better ad placement or more services for your employee recruitment budget.