How can you measure cost savings through contract recruitment metrics?

As a recruiter, measuring cost savings through contract recruitment metrics involves assessing various aspects of the hiring process and comparing them to the expenses associated with traditional permanent hires. Here we need to understand what is Cost per Hire (CPH): Total recruitment costs divided by the number of hires which means comparing the CPH for contract hires with permanent hires. A lower CPH for contract roles may indicate cost savings. I hope it helps :)

Calculate cost savings by analyzing contract recruiter fees, tracking time-to-fill for contract positions, and comparing it to permanent hires. Assess the reduction in administrative and overhead costs related to recruitment. Monitor the success of contract hires by evaluating their impact on project timelines and overall productivity. Regularly review these metrics to optimize cost-effectiveness in contract recruitment strategies.

The cost per hire is a standard metric used to compare the expenses between contract and permanent recruitment. It sums up all expenses related to bringing in a new employee—advertising, screening, interviewing, onboarding, administrative tasks, etc. While this metric varies based on role, industry, location, and candidate source, contract recruitment usually boasts a lower cost per hire. This is because it requires less time and resources to onboard suitable candidates. However, it's important to note that this metric doesn't encompass ongoing employment costs like salaries, benefits, taxes, and training.

Cost per hire (CPH) is a metric used by organizations to measure the average cost incurred to fill a job vacancy. It typically includes expenses such as advertising, recruiting agency fees, employee referral bonuses, travel costs for interviews, and any other expenses related to the hiring process. The formula to calculate cost per hire is total recruitment costs divided by the number of hires within a specific time frame. It helps organizations evaluate the efficiency and effectiveness of their recruitment processes and identify areas for optimization.

In my experience, time to fill is a key metric that sheds light on how efficiently contract recruitment operates. For instance, tracking the days it takes to fill a position impacts team productivity and meeting deadlines. I agree that contract recruitment often shortens this time by accessing ready-to-go candidates. However, it's worth noting that time to fill doesn't measure candidate quality, fit, or their long-term performance within the role, which are equally crucial factors to consider.

Using a contract recruiter can be a highly valuable asset. Not only will you get a quick turnaround but you have access to their knowledge on the market, Candidates and no financial commitment if they are unsuccessful.

In my experience, turnover rate is a telling metric for gauging workforce stability. For instance, calculating the percentage of departures impacts costs and the employer's reputation. I agree that contract recruitment can often help in managing turnover by offering flexible hiring for specific needs without long-term commitments. Nevertheless, it's important to note that turnover rate doesn't dive into the reasons behind departures or measure factors like employee engagement or loyalty, which are essential for understanding workforce dynamics.

In my experience, return on investment (ROI) is a powerful metric that measures the value gained versus the costs incurred in contract recruitment. For example, it helps assess how effectively contract workers contribute to strategic goals. I agree that contract recruitment often enhances ROI by tapping into specialized skills that drive innovation or enhance competitiveness. Nonetheless, ROI doesn't capture intangible aspects like cultural impact, long-term reputation, or ongoing learning facilitated by contract workers, which are equally vital considerations in evaluating their overall value.

If you aim to do recruitment in house you can fall into the false pretence that the salary of one person will be your sole outgoing for recruitment. In my experience you need people who speak to candidates in your market day in and day out. Even if your internal recruiter is able to recruit directly you are likely going to need to pay for marketing, advertising, linkedin & job boards which can rack up quite quickly.

Why do we still view recruiting as just a cost center? The real expense isn't in hiring; it's in making a bad hire – that can cost up to 100 times more! Shift your focus to the quality of hire. It’s not just about how much it costs to hire someone, but how long they stay and how quickly they become productive. Crunchr People Analytics flips the script. It provides metrics that evaluate recruitment effectiveness as an equation of quality, cost, and speed. It's about the lasting impact of a hire. You can track these metrics by recruiter or hiring channel. The result is that HR to drive meaningful conversations with hiring managers, focusing on long-term value rather than short-term costs.

By systematically tracking the contract recruitment metrics, recruiters can gain insights into the cost-effectiveness of their hiring strategies. It's crucial to regularly reviewing and analyzing the metrics that allows for continuous improvement and informed decision-making in talent acquisition processes.