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Post by Rich Moy on May 22, 2018 12:00:00 PM

One recruiting metric that all executives seem to understand is cost-per-hire. Well, at least most leaders think that they know how to calculate it and what it means for an organization. But in addition to tracking the amount it costs to hire a developer, you should also know how much each applicant costs to acquire.

If the idea of measuring cost-per-applicant is new to you, it might be difficult to understand how it differs from cost-per-hire. In this post, we’ll take a closer look at each of these key recruiting metrics, how you can calculate each one, and why you should care about both of them.

Cost-Per-Applicant Measures Your Spend on Recruiting Resources

Think about all of the tools that you use to find tech talent. When you launch a search for a developer, your first thought is probably to post a job listing. If your team has the bandwidth to do outbound recruiting, you’ll likely equip them with online sourcing tools. Your cost-per-applicant metric accounts for things like these that your team uses to find and hire developers.

Calculating this stat is straightforward. For each role, add up the recruiting costs that you’ve incurred, then divide it by the number of qualified applicants you’ve received. Keep in mind that compared to non-technical openings, some of these numbers might seem high. After all, only 16% of developers are actively looking for new job opportunities.

Knowing your applicant acquisition costs empowers you to make meaningful adjustments to your developer hiring strategy. If a job listing on one platform isn’t generating applications, you’ll have data to support the decision to remove it from that careers site. If you’re seeing success with a particular candidate database, it’ll be easy to justify dedicating more resources to it.

Cost-Per-Hire Includes All Spend From Beginning to End

When you want to understand how much it cost to hire a developer, consider everything that we discussed earlier—and all of the costs after you hire a developer.

In addition to online recruiting tools and recruiter hours spent on a role, the amount you spend also includes onboarding, equipment, and salary for a new developer hire. Often, these are pre-determined by your engineering leaders and don’t directly impact your talent acquisition budget. But from a company-wide standpoint, it’s important to know the overall costs to hire a new developer.

While your per-applicant spend tells a story about your tech recruitment strategy, your per-hire costs highlight the importance of retaining developers. Each time one of your programmers accepts a new role, your company should anticipate spending at least the dollar amount that you spent to hire that person. If your retention strategy is lacking, not only will it slow your engineering team down, but these costs could add up very quickly.

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