About Recruitment Costs

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Every recruitment solution, be it a job referral system, job board, social recruiting platform, CRM, or interviewing technology usually highlights the reduction of recruitment cost as a primary benefit. Recruitment costs for new employees, in particular for specialized professions, are a major consideration for employers, which is why reducing turnover is usually a primary concern of the HR department.

There are many different metrics that can useful for determining an accurate assessment of total cost. For recruitment channels such as job boards or agency recruiters, employers can look to the cost-per hire and then overlay that cost with an evaluation of long term performance and quality of hire. Additional data points that are often used in regards to cost include the total cost per hired employee across an entire company, the total compensation per employee, and the total recruitment expenditures for every new hire across a particular time frame.

Recruitment cost is the total amount spent to recruit a hire starting from the job posting to joining the organization. In other words, it can also be termed as cost per recruitment or placed candidate. The analysis of recruitment cost is necessary for profit analysis of an organization or a company. Most recruiters are not aware of this and that is why they can not determine whether their recruitment was effective or not.

To calculate the total profit of a company it is necessary to factor in recruitment costs, and that is why it becomes essential to calculate the total amount spent while recruiting. Recruitment cost per person is necessary to evaluate hiring effectiveness and individual profit gain for this company. By adopting a few steps it can be calculated.

Those steps include the following;

- The total amount spent on job advertisement and promotion needs to be calculated.
- If the recruitment is through referrals or recruitment agencies, the amount spent for that purpose must be calculated.
- Expenditures on logistical supports during recruitment interview or relocation expenses need to be determined and included.
- Interview panel and recruiter costs need to be calculated.
- All of these and other expenses need to be aggregated to calculate the total recruitment budget, overruns or surpluses.

The amount spent per recruitment, i.e., recruitment cost per person, can be determined by dividing the total disbursements by the number of personnel hired.
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