Cost per Hire is a critical metric to monitor for any human resources professional. In the call center environment, due to large hiring volumes, seasonal hiring campaigns, and the constant battle with attrition, Cost per Hire becomes even more critical.
Defining Cost Per Hire
The Society for Human Resource Management (SHRM) published a working paper in March 2011 attempting to standardize the definition and calculation of Cost Per Hire. In the paper, SHRM defines Cost per Hire as External Costs plus Internal Costs divided by the Number of Starts over a particular period. Let’s breakdown each component:
External Costs Used in Calculating Cost Per Hire
Simply put, external costs are defined as all costs incurred outside of the organization during the time period on recruiting efforts. Examples of External Costs include (but are not limited to) advertising costs, job board costs, job fair costs, travel costs, background checks, drug testing, applicant screening costs, and any third party costs incurred such as contingent or retained agency fees.
Internal Costs Used in Calculating Cost Per Hire
Internal costs are costs incurred for the purpose of recruiting during the period within the organization. Examples of internal costs include the fully loaded salaries of the organization’s recruiting teams, infrastructure costs such as applicant tracking systems or other technology, and other systems used in the recruiting process.
Defining Number of Hires
The final element of the equation is the Number of Hires during a period. Simply said, the number of hires (temporary or permanent) that start during the period.
So, What Does It Mean?
Now that you know the definition and the formula, the first step is calculating your own internal Cost per Hire. For some guidance, CallMe! and Emory University recently concluded our 2011 State of Call Center Human Capital Survey wherein we surveyed approximately 100 companies representing some 330,000 call center agents. One of our findings was that call centers with between 200 and 2000 agents have an average Cost per Hire of approximately $1,200.
To put that number in perspective, a 1,000-person call center running a 70% annualized attrition rate would be spending $840,000 per year on recruiting-related costs!
Reducing Cost per Hire Through Recruitment Process Outsourcing
Companies use Recruitment Process Outsourcing (RPO) to augment or replace expensive internal recruiting efforts or traditional temporary and contingent staffing agencies. Reasons for using RPO services include access to a scalable infrastructure, reduced Time to Fill, increased New Offer Yield and, of course, reduced Cost per Hire.
Compared with internal recruiting efforts, RPO firms offer the ability to rapidly scale hiring needs without the need to hire additional recruiters. Further, where call center HR teams typically have additional duties in addition to recruiting, RPO companies are compensated specifically for their ability to source quality candidates. This means an increased emphasis on the process and outcomes.
Finally, instead of “start and stop” recruiting, RPO can allow companies to develop a consistent candidate pipeline without the typical associated costs.
Using RPO to augment or replace internal recruiting efforts means a reduction in both the external and internal costs discussed earlier that make up Cost per Hire. Recruiter salary, advertising and marketing spend, assessment testing costs and more are all reduced by outsourcing.
How CallMe!’s RPO Services Can Help Your Call Center
CallMe! designed its call center RPO services with the specific needs of call center companies in mind. With a laser focus on sourcing Active and Passive candidates, and an emphasis on call center oriented screening and assessment testing, CallMe! RPO will significantly improve your recruiting process while reducing costs.
It Starts with the Pipeline…
The key to CallMe! RPO is the robust, always-on recruiting engine powering our recruitment efforts. We use technology, people and process to deliver candidates from a variety of sources. On-shore and off-shore recruiting teams ensure immediate scalability when the need arises and we leverage extensive proprietary and public databases to source even the hardest to find candidates.
Identifying the Best Candidates for YOUR Call Center…
More than just “knock-out” questions, CallMe!’s screening process matches candidates to a customized job profile specific to your call center. Utilizing personality, skill set and aptitude testing combined with recorded voice interviews, we increase the likelihood of candidate fit while reducing live screens – saving you time and money!
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