Is “Cost Per Hire” a Vanity Metric?

For being such a people-focused field, human resources—especially in trucking—has a problem of putting a lot of faith in the opposite of people: quantifiable facts and statistics.

While it’s important to be able to put a fine point on figures, holding some of these figures in incredibly high regard miss the point. And they don’t tell the whole story of what companies like yours are capable of.

Case in point: “cost per hire,” the measure of the effort exerted, defined in financial terms, to staff an open position in an organization, as defined by the Society for Human Resource Management.

While it’s widely used, its validity is in question.

“I nominate the calculating of ‘cost per hire,’ as the single most pointless and damaging exercise in recruiting,” writes Dr. John Sullivan in an article for ERE Media.

The problem with using this metric as the benchmark for human resources success has deep ramifications.

The Problem With Cost Per Hire

If you were the CEO of the Chicago Bulls, and you were trying to woo Michael Jordan to come to your team, you’d have a blank check to get the job done. Why? Because the cost of recruiting him (steak dinners, fancy gifts, etc.) pale in comparison to the economic benefit of winning the NBA championship.

Trucking recruiters need to start thinking this way, too. Companies that put steely focus on cost reduction at all costs can’t possibly produce high-performing hires.

That’s what a focus on cost per hire can do. It’s a stiff metric that brings along many negative consequences that companies can’t afford.

Let’s put this another way:

Let’s say you run a 1,500-driver company with 100% turnover, and you spend $5 million per year on recruiting new drivers to fill those vacancies. With a cost-per-hire mindset, you could say your cost is roughly $3,300 per recruit.

But that’s not the entire picture. You’re paying an incredible amount of money just to stand still—not grow.

Saying your cost per hire is $3,300 is missing the picture, and if you’re holding that metric in high regard, you’re doing your retention capabilities a disservice.

Cost Per Net Add

Back to that 1,500-driver company: let’s say one year of hard work yielded an additional 50 drivers to your team, bumping your total number of drivers to 1,550.

With the same amount of money being spent on recruitment ($5 million), you just lowered your cost per hire to $3,325. Sounds great, right?

Not quite.

Cost per hire may be a popular metric, but it’s all vanity because it misses one very important element: the fact that recruitment and retention work hand-in-hand.

If you’re only getting 50 new drivers’ worth of growth to your company, the important metric—cost per net add—is $100,000 per driver added to your team.

The metric companies should focus on is cost per net add, because it indicates a true unity between recruitment and retention, with the end goal of adding growth to your company rather than rewarding complacency.

How Your Company Can Help

The role of your human resources department—or whichever team members are in charge of recruitment and retention—is incredibly important. But by placing focus on cost per hire, a metric which focuses exclusively on the benefit of retention, you’re just staying the same, not growing.

Help your recruitment and retention department do their job better by giving them the tool they need to keep drivers engaged, motivated and on your team.

Learn about the power of anonymous feedback, and how one company saved more than $500,000 in their first year with WorkHound. Download our stunning case study now!

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