Recruiting Cost Ratio

Recruiting Cost Ratio

KPI Details

Recruiting Cost Ratio measures the expense incurred by the Recruiting and Hiring function in relation to the total compensation-related expense incurred for the positions filled over the same period of time. High values for this metric can be indicative of inefficient choices of regions from which to recruit from (i.e., universities, online job listings, sponsored events, etc.), poor candidate selection for interviews (i.e., choosing candidates who are not the best fit for the position, etc.), inefficient candidate offers (i.e., offers that do not provide cost effective compensation in the eyes of either the candidate or the company), and sub-par Recruiting & Hiring employee training and performance. Each of these factors can prolong hiring cycle times, waste time recruiting in areas that provide few qualified candidates, increase the chances that a candidate unfit for the position will be chosen, and increases the possibility that the company will be compensating the candidate with amounts not appropriate for the position.

KPI Definition

The expense incurred by the Recruiting and Hiring function divided by the total compensation-related expense incurred for the positions filled over the same period of time, as a percentage. Compensation typically includes wages, salaries, commissions, benefits, etc.

KPI Best Practices

• Promote employees internally to minimize external recruitment costs
• Post job openings on industry-specific websites to reduce time spent sifting through unqualified applications
• Minimize turnover rate through incentives, regular employee reviews and structured career paths

KPI Calculation Instructions Recruiting Cost Ratio?

Two values are used to calculate this KPI: (1) the expense incurred by the Recruiting and Hiring function, and (2) the total compensation-related expense incurred for the positions filled over the same period of time. Includes wages, salaries, commissions, benefits, etc. when calculating compensation amounts for the positions filled. Include labor (wages, salaries, commissions, benefits), overhead (occupancy, utilities, supplies, advertising, legal fees, travel costs, etc.) and technology (hardware, software, end-user operations, etc.) costs for the Recruiting & Hiring function in the numerator. Include both positions filled by internal (candidates that are already existing employees) and external candidates (candidates that are not currently working for the company) in this calculation.

KPI Formula :

(Recruiting & Hiring Expense Incurred / Total Compensation of Filled Positions) * 100