Talent acquisition professionals consistently rank cost-per-hire as one of the most helpful HR metrics. But most struggle to measure and, more importantly, optimize their learnings to achieve efficiency without sacrificing quality. Learn the cost-per-hire best practices that will enable your talent acquisition team to drive high-performing, engaged hires for your organization. Key Takeaways: -How to properly calculate your cost-per-hire -Understand the cost-per-hire long-game for hiring success -Consider cost-per-hire as part of the overall discussion on talent acquisition ROI

1. 0WE BECOME YOU™Content Property of Cielo, Inc.
OPTIMIZING COST-PER-HIRE
TO DRIVE QUALITY
@CieloTalent
#talentmindset
Learn the cost-per-hire best practices that will enable
your talent acquisition team to drive high-performing,
engaged hires for your organization.

2. 1WE BECOME YOU™
Andrew Manning
Senior Vice President, Cielo
@AndMann
• Andrew leads a team of subject matter
experts, who design, build and
implement all stages of the talent
acquisition transformation journey.
• Andrew believes in enabling
companies to increase business
performance by improving the quality of
the talent entering their business.
TODAY’S PRESENTER

3. 2WE BECOME YOU™
IN RECRUITING, HOW IMPORTANT IS COST-
PER-HIRE?
I believe cost per hire is a misguided means to
judge recruiting department performance.
For one, it rewards the wrong things and
ignores quality of candidate and quality of hire.
For another, it’s far too tactical and narrowly
focused. Worse, improving costs could
degrade quality.
Lou Adler
“
”

4. 3WE BECOME YOU™
• Put Cost-Per-Hire in context as part of an
overall discussion on value
• Examine how the importance of Cost-Per-
Hire depends on the talent you need to hire
• Highlight the components you should use to
calculate Cost-Per-Hire
• Demonstrate how a low Cost-Per-Hire can
actually be more expensive in the long run
• Look at the potential impact on the business
of having a high-performing talent acquisition
function
THIS WEBINAR WILL HELP YOU:

5. 4WE BECOME YOU™
WHAT IS ROI IN RECRUITING?
COST
QUALITY
AGILITY
Agility is the
measurement of the
speed at which the
resourcing function’s
strategy and
activities are
capable of
responding to
changes in business
demands
Quality drivers sit across a
number of measures e.g.
candidate & hiring manager
experience, new hire attrition,
new hire performance, source
of hire, employer brand, NPS,
conversion rates
True Cost of Hire is
a complex calculation
including team costs,
operational cost of
line management,
marketing spend, and
supplier costs
The Perfect Balance?
Difficult to achieve, but
then, it is not often the
target. Business drivers
inevitably lead to a
weighted model with
importance of Cost, Agility
& Quality depending on
what talent you are hiring

6. 5WE BECOME YOU™
COST PER HIRE VARIES BY ROLEImportanceofcostperhiredecreases
Importance of cost per hire decreases
Scarcity
Seniority
Expert One
Skilled Few
Talented Many
Approach
• Investment
• Complexity
• Time
• Resources
Delivering quality
hires consistently
is perceived as the
most important
strategic function
of talent
acquisition for all
stakeholders (C-
Level, Business
Unit Leaders and
Talent Acquisition
Leaders)
Cielo’s Talent
Acquisition 360
Research
“
”

7. CALCULATING COST PER HIRE
Cost Per Hire =
( )∑(External Costs) + ∑(Internal Costs)
Total Number of Hires in a Time Period
External Costs Internal Costs
• Pre-hire Health
Screens
• Pre-Screening
• RPO fees
• Relocation Fees
• Sign-on bonuses
• Sourcing Costs
• Travel & Expenses –
Candidate
• Travel & Expenses –
Recruiter
• Technology
• Third-Party Agency
Fees
• Advertising &
Marketing
• Background &
Eligibility Checks
• Campus Recruiting
• Consulting Services
• Contingency to
Regular Fees
• Drug Testing
• Employee Referral
Awards / Payments
• Immigration Expenses
• Job Fairs / Recruiting
Events
• Cost of Recruiting
Staff
• Cost of Sourcing Staff
• Internal overheads
• Non-labor office costs
• Recruiting L&D
• Secondary
Management – Cost of
Time for Events
• Secondary
Management – Cost of
Time for Recruiting
# of Hires
• Total number of hires in
a time period
• New hires
• Backfill due to
attrition

8. 7WE BECOME YOU™
WHAT ARE THE CHARACTERISTICS OF AN
OPTIMIZED RECRUITING FUNCTION?
Source: Bersin by Deloitte, 2014.
New-Hire
Turnover
TimetoFill(in
Days)
18
%
16
%
14
%
12
%
10
%
8%
6%
4%
2%
0%
60
50
40
30
20
10
0
17%
44
55
Level 1 –
Reactive
Tactical
Recruiting
Level 4 –
Optimized
Talent
Acquisition
Cost-Per-Hire
$3,258
10%
Mature recruiting organizations
spend more by hire
But, maturity brings better quality
of hire and increased agility
Cost-Per-Hire
$6,465
What is the potential cost impact?

9. 8WE BECOME YOU™
WHAT ARE THE CHARACTERISTICS OF AN
OPTIMIZED RECRUITING FUNCTION?
Source: Bersin by Deloitte, 201
2x
40%
20%
Spend per hire equates to:
Less new-hire attrition
Faster time to fill
What is the potential cost impact?

10. 9WE BECOME YOU™
LET’S TAKE TWO SIMILAR COMPANIES
ABC, INC.
• $1Bn Turnover
• 10,000 employees
• 1,000 annual hires
• Average compensation = $50k
“Optimized” Talent Acquisition Function
• Average CPH = $6,465
• Average new hire attrition = 10%
• Average Time to Fill – 44 days
XYZ, INC.
• $1Bn Turnover
• 10,000 employees
• 1,000 annual hires
• Average compensation = $50k
“Reactive & Tactical” Recruiting Function
• Average CPH = $3,258
• Average new hire attrition = 17%
• Average Time to Fill – 55 days
…now let’s compare based on cost, quality & agility measures

11. 10WE BECOME YOU™
ABC, INC. SPENDS 2X MORE
ON HIRING THAN XYZ, INC…
…what impact does this extra investment have on quality?
1,000 1,000
$6,465 $3,258
$6,465,000 $3,258,000
+$3,207,000 -$3,207,000
Cost Per Hire
Number of hires per annum
Average Cost Per Hire
Total Annual Cost Per Hire
Difference – ABC, Inc. vs XYZ, Inc.
Average Cost Per Hire figures taken from Bersin by Deloitte

12. 11WE BECOME YOU™
LET’S LOOK AT THE QUALITATIVE
ELEMENT HIGHLIGHTED BY BERSIN
First year turnover is a good indicator of quality.
Turnover is expensive.
The average cost of replacing a
departing employee is
$48,982
Source: Telegraph.co.uk reporting on 2014 Oxford
Economics Study
The average cost of turnover for
new hires is equivalent to
to times the annual pay of
the departing employee
one
1½
Source: PwC Saratoga
…what impact does this have on our example?

13. 12WE BECOME YOU™
40% LESS NEW HIRE TURNOVER
EQUATES TO $4.4M
…what about the impact of Agility as measured by Time to Fill?
1,000 1,000
10% 17%
$6,250,000 $10,625,000
-$4,375,000 +$4,375,000
Cost of First-Year Attrition
Number of hires per annum
First-Year Attrition Rate
Total Annual Cost of Y1 Attrition
Difference – ABC, Inc. vs XYZ, Inc.
First-Year attrition figures taken from Bersin by Deloitte
100 170
$50,000 $50,000
Number of Y1 leavers
Average Annual Salary
1.25 1.25Cost of attrition – salary multiplier

14. 13WE BECOME YOU™
20% FASTER TIME TO FILL
EQUATES TO $2.5M
$1Bn $1Bn
10,000 10,000
44 days 55 days
$20,000,000 $25,000,000
Total Annual Revenue
Number of employees
Average Time-to-Fill
Lost Gross Opportunity Revenue
Average Time-to-Fill figures taken from Bersin by Deloitte
$100,000 $100,000
$455 $455
Average annual revenue per employee
Average revenue per employee day (220 days)
1,000 1,000Number of annual hires
$227 $227
$10,000,000 $12,500,000
Average cost per employee day (220 days)
Total salary saved for open roles
$50,000 $50,000Average annual salary
$10,000,000 $12,500,000
-$2,500,000 +$2,500,000
Lost Net Opportunity Revenue
Difference – ABC, Inc. vs XYZ, Inc.
Lost Opportunity – Time to Fill

15. 14WE BECOME YOU™
WHO HAS BETTER QUALITY HIRES?
COST
QUALITY
AGILITY

16. +$3,207,000 -$3,207,000
-$4,375,000 +$4,375,000
-$2,500,000 +$2,500,000
-$3,668,000 +$3,668,000
Difference in Cost Per Hire
Difference – First-Year Attrition
Difference – Lost Opportunity/Time to Fill
Total Difference – ABC, Inc. vs XYZ, Inc.
Despite spending 2x more on its
recruiting program, the actual cost to
ABC, Inc. is $3.7M less per annum than
XYZ, Inc.
$3.7M
SO, IS IT SMART BY NAME & SMART BY
NATURE?
The Results

17. Source: Boston Consulting Group
1
2
3
4
5
6
Delivering on recruiting
Onboarding of new hires and retention
Managing talent
Improving employer branding
Performance management and rewards
Developing leadership
3.5x 2.0x
2.5x 1.9x
2.2x 2.1x
2.4x 1.8x
2.1x 2.0x
2.1x 1.8x
Topic in which most capable and least
capable companies were compared
The impact that the most capable companies
achieve over the least capable companies
… revenue growth … profit margin
Economic influence is noticeable in all HR topics…
but is most pronounced in six:
EXCELLING AT RECRUITING LEADS TO
POSITIVE BUSINESS OUTCOMES…

18. 17WE BECOME YOU™
A balanced recruiting strategy is an optimized blend of cost, agility and
quality – the balance varies depending on the talent you are hiring
If you are going to measure cost per hire, make sure you include all
the relevant external and internal components
Investing more on recruiting can improve quality of hire, increase
agility and consequently be less costly in the long run
Excelling at recruiting can have a significant and positive impact on
business performance
Within HR, recruiting is arguably the function that can provide the best
return on your investment
KEY TAKEAWAYS
1
2
3
4
5
If you can’t measure it, you can’t manage it
“ ”Peter Drucker