Easily calculate the cost of your recruitment

Imagine a world where recruiting the perfect employee doesn't cost more than one click. Unfortunately, in business reality, hiring a new talent is far from being as simple or economical. Each recruitment is a strategic quest that incurs costs well beyond the promised gross salary.

From the announcement of the job offer on specialized platforms, through the long hours of interviews and evaluations, to the integration and training of the new employee, each step accumulates direct and indirect costs, which are often underestimated. But what is the real cost of recruiting for your business? And how do these expenses translate into a long-term investment in your team and company culture?

This article reveals not only how to accurately calculate these costs, but also how to transform your recruitment process into a powerful growth driver.

1 - Understanding the cost of recruitment: Beyond the numbers

The recruitment cost is divided into several components: direct costs and indirect costs, which fluctuate according to the profile sought, the sector, the size of the company, as well as the recruitment strategy adopted. The recruitment cost is therefore specific to each case.

To determine the cost of your recruitments, identify the key components, according to your situation and your goals. Below is a list of components to consider.

1.1 - Direct costs

Direct costs are those that are directly attributable to the recruitment process. They are specifically involved in the hiring of a new employee and can be easily quantified and linked to the act of recruitment.

• Salaries and social security contributions: Although mentioned, it should be noted that the salary and social security contributions of the new recruit are usually considered post-recruitment costs. However, social and employer contributions (depending on the level of remuneration and the type of contract) can be considered as direct costs if they relate to the trial period.)
• Cost of recruitment tools and software
• The salary of the recruiter or the recruiting team : This cost may be considered indirect in some contexts, but here, we assign it to direct because it relates directly to the recruitment process.
• The costs of publishing the job offer according to the number and type of channels used (job portals, social networks, etc.).
• The costs of sourcing candidates, taking into account whether or not to use a recruitment agency or a headhunter, and their fees.
• Expenses related to the selection of candidates, depending on the number and nature of the tests and interviews incurred, including possible travel or meal expenses.
• Administrative costs related to hiring procedures (declarations, contracts, etc.)
• The costs of integrating the new employee, depending on the time and resources required for its training, equipment, welcome manual, etc.

1.2 - Indirect costs

Indirect costs are those that are not directly linked to the act of recruiting a new employee but are nevertheless generated by this process. These costs are more difficult to quantify and to attribute specifically to recruitment.

• Time spent by the HR team and managers : represents the hours of work invested by HR in the recruitment process, which can distract these professionals from their usual tasks and can impact company productivity.
• Impact of integration on teams : Current team members spend time training and mentoring the newcomer, which can temporarily reduce the overall effectiveness of the team and change the established work dynamic.
• Opportunity cost : the potential loss of opportunities that the company could have seized if the resources (time, money, effort) used for recruitment had been allocated to other strategic or operational initiatives, resulting in a possible reduction in revenue or growth.
• The costs associated with Turnover, taking into account the risk of recruitment errors, the departure of the employee, and the cost of a new hire, etc.

1.3 - The importance of considering each stage

Determining the real cost of recruiting is more than just the sum of direct and indirect costs. It is also necessary to analyze each phase of the hiring process and its impact on the total cost.

Key steps in the recruitment process include:

1. The definition of the need, with the analysis of the position, the profile sought and the context.
2. Writing and distributing the job offer, by choosing the right channels and keywords.
3. The search and identification of candidates, via the Sourcing, hunting or co-optation.
4. The pre-selection of candidates, including the sorting of CVs and the reference check.
5. The selection of candidates, through interviews, tests and simulations.
6. The final decision, including salary negotiation and contract signing.
7. The reception and theintegration of the new employee, with training, monitoring and evaluation.

Each phase carries costs, dictated by the time invested, the resources employed and the quality of the result obtained. Optimizing these steps is essential to reduce the overall cost of recruitment and improve the return on investment.

2 - Calculate the Cost of Recruiting

After identifying the crucial components, you are ready to develop a basic equation that will serve as a reference for calculating the cost of your hires. A simple and effective method is as follows:

Recruitment cost = (direct costs + indirect costs)/the number of recruitments carried out over a given period, for example over a month or over the past year, making it possible to obtain an average recruitment cost.

This formula provides you with the average cost of recruitment by integrating all expenses related to the hiring process and the integration of the new employee, expressed in euros and taking into account the additional effort required for successful recruitment.

Digital tools, such as HRIS software, can facilitate the calculation of the cost of your recruitments. These solutions help you manage and monitor your hiring processes, measure key metrics, and better manage your budget.

If you ever want to calculate the amount and the date of reaching your ROI, for each of your new hires, Ignition Program, an expert HR solutions firm, has developed a recruitment profitability simulator. We personally liked how easy it was to use the tool and how free it was.

Start your simulation

3 - Optimize and reduce the cost of recruitment

Controlling recruitment costs is essential to the development of any business. Fortunately, effective strategies exist to both reduce and optimize these costs while improving the quality of recruitment.

Here, we will explore two major areas: investing wisely and improving the efficiency of the recruitment process, as well as the benefits of internal recruitment and strengthening the employer brand.

3.1 - Smart investments and process efficiency

Optimizing recruitment costs does not necessarily mean reducing expenses at all costs, but rather investing wisely in tools and methods that save time, target appropriate candidates, and effectively measure return on investment. Examples of relevant investments include:

• Adopting recruitment software like a ATS to manage applications, distribute offers, sort profiles
• Use software to conduct evaluations such as Yuzu : a new generation Assessment Center, specialized insoft skills assessment (the famous soft skills).

With Yuzu, talents are immersed in scenarios developed with the latest Video Game technologies.

Assessments, on the other hand, are accessible to all profiles thanks to simplified commands and cloud technologies (all you need is a computer and an internet connection to be evaluated).

Lower your recruiting costs with Yuzu

The advantages of our solution:

1. One candidate experience exceptional to boost your employer brand ;
2. A solution accessible to all to ensure equal opportunities;
3. A decision support tool to detect and promote interpersonal skills.

Whether it's for your recruitment process Or of internal mobility, we are transforming the assessment of Soft Skills in a strong and fun moment.

• The use of online recruitment platforms to access a pool of qualified talent, at a lower cost than traditional agencies.
• The implementation of analysis and reporting tools to monitor key indicators such as cost per hire, recruitment time, and retention rate.
• Improving the efficiency of the recruitment process also means simplifying and streamlining it, for example by identifying a raw number of candidates and doing additional screening to obtain the most qualified individuals, which is often necessary during a volume recruitment. Here are concrete actions to achieve this:
• Clarify recruitment needs through a precise analysis of the position, the profile sought and the context.
• Write and distribute an attractive and well-targeted job offer, carefully choosing keywords and distribution channels. To simplify your task, discover our article on the best hooks for your ads.
• Pre-select candidates based on objective criteria, using skills and personality assessments.
• Select the candidates who best fit the position and the corporate culture, through structured interviews.
• Make the final decision by considering all the elements collected, negotiating in a fair and transparent manner.

3.2 - Benefits of internal recruitment and strengthening the employer brand

Optimizing the cost of recruitment also involves exploring alternatives to external recruitment that can offer long-term benefits. Let's explore internal recruiting and strengthening the employer brand.

The internal recruitment, which favors the promotion or development of existing employees, offers several advantages, including the fact of not having to recruit again, thus saving the annual salary costs associated with external recruitment.

• It reduces the costs associated with the search, selection and integration of new external talent.
• It values and motivates employees, strengthening their commitment and loyalty.
• It facilitates the adaptation of the promoted employee thanks to his prior knowledge of the company.

Another good solution is to use co-option.

Strengthening the employer brand, aimed at promoting the company's image as an attractive employer, also leads to several benefits:

• It reduces the costs of distributing job offers, by naturally attracting candidates.
• It increases the quality and quantity of applications, distinguishing the company from its competitors.
• It decreases the costs associated with turnover, by increasing talent retention and by minimizing Recruiting mistakes.

3.3 - Preventing the Costs of Bad Recruitment

Identifying the warning signs of failed recruitment is not always easy. However, some indicators are not misleading. A high turnover rate, a drop in productivity or even frequent delays in the completion of projects are all warning signs. As a savvy recruiter, pay attention to these signs. They often reflect a lack of alignment between the values of the company and those of the people recruited.

The importance of cultural alignment cannot be underestimated. A recent study by the Ministry of Labor reveals that the adequacy between a company's culture and the profile of a candidate can significantly reduce the risk of a contractual break during the first year. This highlights the need to incorporate questions related to corporate culture from the early stages of the interview. It is a powerful tool for attracting and retaining rare and valuable talent.

As for retention strategies, they should be considered as an integral part of your recruitment process. From the implementation of effective onboarding to the offer of continuous training, including the establishment of a positive working climate in your premises, each action contributes to the retention of your best employees. Using powerful recruitment software can facilitate human resources management and help keep up with the evolution and needs of each employee.

To remember

At this stage, you have the tools you need to assess the cost of your hires, taking into account both direct and indirect expenses, as well as each phase of the hiring process.

You are also informed about strategies to reduce and improve these costs, through careful investments in appropriate equipment and techniques, without forgetting to consider alternative options to external recruitment.

It's time to apply these tips to improve the efficiency and quality of your hiring processes. Learn how to turn the cost of recruiting from a constraint into an opportunity to streamline your budget and increase profitability.