Of course, this is an average of all industries for all jobs in all sectors
of the nation. Regional differences, manufacturing versus service
hires, and the various recruitment sources available will dramatically
impact your company’s particular results.

The costs in the following table would normally be included in
the CPH calculation. The cost by source is an important piece of
information to consider when evaluating the success of your recruiting programs. In addition, the ‘‘source cost analysis’’ measures theeffectiveness of each particular method. The table on the following page shows how EMA’s survey ranked its members’ results according to source effectiveness in 1999.

Percent of Total Hires
(a.k.a. Source Average Cost-per-Hire
Source Cost Analysis) (CPH) from Each Source
Advertising 28.9% $1,589
Employee referrals 21.8% $479
Contingency agencies 11.7% $11,827
Internet 9.5% $331
Job fairs 4.8% $429
College recruiting 3.3% $370
Other 18.5% NA

Of course, there is often a tradeoff between effectiveness and
cost: Contingency search firms rank third after advertising and employee referrals in terms of effectiveness, but they’re the most expensive sourcing method on the list. Internal referrals and Internet
ads are among the lowest in terms of cost and the highest in terms
of effectiveness. (In addition, the two years since this survey was
taken have witnessed a dramatic increase in successful Internet recruitment sourcing.)

That being said, the simple answer to this question is this: Beef
up your internal referral programs and Internet classified advertising
outreach. In most cases, there’s no better place to invest your
recruitment dollars. On the other hand, although the cost-per-hire
for agency hires has been steadily increasing over the past ten years
(to approximately $12,000), this methodology may be the most effective choice when candidates are scarce and time is of the essence.

To order a copy of the EMA’s Cost-per-Hire and Staffing Metrics
Survey, contact the Society for Human Resource Management
(SHRM) in Alexandria, Virginia, at (703) 548-3440, or reach SHRM
at www.shrm.org/ema. The survey is free to SHRM members and
costs $45 for nonmembers.

Taken From : The Hiring and Firing Quention and Answer Book