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Post by Rich Moy on Jun 14, 2018 1:30:00 PM

Ever since SHRM published the first formula for calculating cost-per-hire, many executives have used this metric as an indicator of the overall success of their HR functions. When talent acquisition teams don’t hit their goals, managers still tend to look for ways to lower their recruiting expenses, even for developer roles with difficult talent markets.

You could easily find a handful of ways to slash your tech recruitment budget. But is that the right approach? While the solution to all of your developer hiring challenges isn’t always to increase spend, here are a few reasons why you shouldn’t necessarily seek to decrease it.

The Cost of an Unfilled Developer Position is Rising

How would C-level executives outside of the recruitment function react if you told them that your typical costs to hire a developer were $12,000? Many of them would likely increase the pressure on you to reduce your tech recruitment spend. But while hiring developers can seem expensive, the costs of an unfilled developer role can have an even greater impact on your company.

Today, HR leaders estimate that cost of an unfilled technical role is $500 per day. Among other things, this number accounts for potential revenue and delayed project timelines. To extrapolate this further, let’s say that it typically takes your company 40 days to hire a developer. When you multiply that out, your company could be on the hook for a whopping $20,000 of lost productivity.

If your colleagues raise an eyebrow at your per-hire expenses, be transparent with them about how you’ve spent that money. Then, walk them through the exercise that we explored in the previous paragraph.

Most Tech Candidates Are Only Passively Interested in New Jobs

For some roles, recruiting teams can post a job description on a few careers sites and expect a few highly-qualified applicants to appear in their inbox. But with just 15% of developers actively looking for new jobs, talent acquisition teams need to be much more proactive.

How does this impact your talent acquisition strategy? Your technical recruiters might need to increase attendance at hackathons and other related meetups. For many of these events, there are travel expenses and attendance fees that factor into your overall expenses. Additionally, your online sourcing efforts likely need a boost from developer-centric employer branding campaigns. It’s no secret that tactics like these are necessary to find tech talent today—but the harsh reality is that those efforts come at a cost.

For these reasons, it’s crucial for talent acquisition leaders to calculate their cost-per-developer-hire as a separate metric. This will enable you to compare your spending across different roles and to make a stronger case for a higher tech recruitment budget.

Cost-Per-Hire Also Includes Onboarding and Equipment Costs

The original formula published by SHRM accounts for the recruiting activities required to fill an open position. But it’s also vital for talent acquisition leaders to differentiate the difference between cost-per-hire and cost-per-applicant. SHRM’s formula is an effective way to measure the latter, but your costs to hire a developer account for much more.

By now, you probably know that programmers are attracted to companies that offer top-of-the-line equipment and access to training materials. They’ve also told us repeatedly that they look for teams that take onboarding for new employees seriously. When you calculate your cost-per-hire, include these expenses in your formula. Not only does this paint a more accurate picture for your fellow managers, but it illustrates the importance of retaining your top technical talent.

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