What does recruitment cost?

It is often uncertain which costs has to be expected when hiring a new employee. But be careful: This is not only because recruiters usually don't wish to show their hand!

From the perspective of an RPO Recruitment Process Outsourcing Partner, we want to create transparency with this analysis.

Even hr managers in companies are often unable (or unwilling) to provide specific information on how much it costs to recruit for a position, a campaign or the entire recruitment process in the company.

If these data are not accurately compiled, all other effort assumptions are based on estimates. This is an extremely poor basis for measuring progress and improvement, the effectiveness of overall recruitment or even individual actions or tools.

It depends, ...

... what is included and what expenses are left out. The working times used to operate all processes are often disregarded. These include the determination of requirements, the formulation of requirements and the recruitment of candidates. In between there are, for example, job advertisements that have to be created, coordinated and distributed, requests from applicants who want to know whether the vacancies are still open, the review and evaluation of documents, interviews, shortlist and much more.

An objective analysis requires a prior definition of the following parameters

All positions listed below require the time of trained specialists and/or resources of the respective specialist areas (HR, IT, Marketing, ...). This is independent of whether internal (employees) or external specialists (headhunters, RPO partners, ...) spend their working time.

Cost and quality-relevant expenses, ...

... which were considered 100% in the following list and calculated accordingly.

1. Operation, adaptation (customizing) of an application management system with 24/7 access for applicants, decision-makers and processors
2. Protection of the company against computer viruses embedded in application e-mails
3. Illustration / proof of all requirements according to §28 EU-DSGVO
4. Definition of staffing projects in an application management system and allocation of rights
5. Creation and design of job advertisements
6. Distribution of job advertisements on online and offline job markets incl. placement costs, also "premium" job markets
7. Acceptance of applications, confirmation of receipt within 24 hours.
8. Standardization of the application according to customer specifications (one single pdf file)
9. Running an applicant hotline
10. Ongoing communication with applicants such as entry receipts , queries, interim messages, notices of invitation, cancellations
11. Coordination / moderation of the internal decision-makers involved in the project
12. ActiveSourcing for Escalation
13. If necessary, coordination / involvement of third party service providers for ACs, graphic designers, writers, and interviewers
14. Project-accompanying consulting and escalations, if necessary
15. System adaptation and maintenance
16. Expenses, coordination of applicants' travel expenses
17. Comprehensive reporting / development of numerous KPIs

The following are not considered in this analysis

• Costs of interviewers in the company (time spent by employees of the contracting companies),
• internal time expenditure for e.g. company tours with applicants
• Time needed and, if necessary, monetary expenditure for drawing up the contract,

because these positions are beyond our knowledge.

Recruiting costs by profession

The following costs are real average values of hundreds of appointments by FEL GmbH as RPO partner of their clients throughout Germany until 2018. These include international corporations with several thousand employees, government clients but also small businesses with individual hires p.a..

Note: With a higher volume of settings (>100 MA p.a.), the costs per setting in the individual ranges are reduced significantly in some cases.

The result may be a surprise. It is definitely a first indication for benchmarking.
Our tip is for you to compare your values with the above values.

Benchmarking in Recruitment

Take all cost- and quality-relevant expenditures for recruiting of your own company, determine the number of occupied positions, allocate them to the occupational groups and multiply them by the comparative values.

Example "Cost Report and KPI in Recruitment"

Using a real-life example, this report shows how professional and up-to-date the costs and KPIs for recruiting can be monitored. The report compiled with MS PowerBI is produced by the RPO service provider. It is the basis for the HR department's actions and for reporting to its corporate management. Measures, KPIs and costs are listed and evaluated across periods and in any combination. This creates the basis for forecasts and budget planning.

This example is an MS PowerBI real-time report that reflects the status of each individual staffing project (role, position) on a daily basis. The data flows via interface (API) from the application management system and from financial accounting.

If you would like more information on recruitment costs, especially for your industry and company size, please do not hesitate to contact us. We always provide you with transparent first-hand information!