You’re not factoring in engineering time when calculating cost per hire. Here’s why you should.
No recruiter’s budget is limitless, otherwise we’d all be conducting interviews in Las Vegas over a bottle of Dom Pérignon (in expensive leather pants). Knowing your cost-per-hire (CPH) is crucial, as it means your recruiting team can plan their budget for the next cycle. And as we’ll explain here, the most easily overlooked aspect of your CPH is… (drumroll)... engineering time.
Why engineering time matters
The way we calculate CPH is usually confined to recruitment spend alone. But this completely overlooks arguably the most important thing of all – how much time your team is actually spending on hiring. More specifically, engineering time, despite being one of the most expensive resources, isn’t usually measured as part of the overall CPH. Rather, it’s generally written off as part of the cost of doing business. But this is short-sighted. Here’s why measuring your engineering time matters:
- Engineering time is more expensive than recruiting.
- Engineering expenditure can vary wildly by channel.
- Engineering time is often more time-consuming than recruiting.
The irony, of course, is that a typical interview process puts the recruiter call at the very start of the process precisely to save engineering time. But if we don’t measure and quantify engineering time spent, how can we ‘save’ it?
How much does engineering time actually cost?
Let’s look at a typical engineering hiring funnel. For the purposes of this exercise, we’ll start the funnel at the recruiter screen and assume that the costs of sourcing candidates are fixed.
The green arrows represent conversion rates between each step; for example, 50% of people who get offers will accept and get hired. The small grey text at the bottom of each box represents how long each step takes for an engineer or recruiter (or both, in the case of an onsite process). And the black number represents how many times each step needs to happen to ultimately make one hire, based on the green arrow conversion rates.
So what does all this tell us? Based on a figure of $100/hour for recruiting, and $150/hour for engineering, to make one hire it takes 15 recruiting hours, or $1,500. Equally, one hire means 40 engineering hours, and $6,000 of engineering time.
Additionally, there is one more subtle multiplier on engineering time that doesn’t apply to recruiting time. Every time you interrupt an engineer from their primary job – which is solving problems with code – it takes them time to refocus and get back into the groove. Therefore, if we take into account ramp-up and ramp-down time, we’re looking at a figure more like $9,000 in engineering hours.
That means when all is said and done, for one hire, we’re looking at a total spend of $10,500. But here’s the headline: engineering incurs six times the cost than recruitment does. Whichever way you cut it, that’s a lot of bottles of bubbly we’re pouring down the drain.
Calculate your cost-per-hire
In this guide, we’ve only skimmed the surface of the various cost implications of recruitment. For more insights and fancy graphs to help your hiring team manage their budget, read our guide on how to calculate cost-per-hire.
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