CPH (Cost Per Hire) — Cost Per person to Hire, is one of the most common and important indicators of human resource management in every company. Technical hiring costs are often grossly underestimated and underappreciated because they do not fully account for the time spent by developers (including technical leads, senior engineers, etc.) interviewing candidates. Aline Lerner, founder and CEO of Controlling IO, has researched this question in depth and hopes to inspire you.

How is CPH calculated, and why is developer time ignored?

The main purpose of calculating the recruitment cost per employee is to plan the budget for the next phase of the HR recruitment team. The approach recommended in the workshop was to add together all the external and internal costs incurred in a hiring cycle and then divide by the number of hires.

“External” means any payment made to a third party. This includes resume sources, recruitment tools (e.g., talent assessment, ATS, etc.), agency fees, travel and accommodation for candidates, and recruitment events/fairs.

“Inside” refers to the money you spend in the company: the salary of the recruiting team and referral rewards paid to employees who made internal referrals in the previous cycle. It’s important to note that internal costs do not include salaries, as developers (or programmers, software engineers, etc.) and hiring teams are often paid out of different budgets. Recruiters are part of the HR recruiting team, and they pay out of their own pockets. Developers earn money from projects.

The problem is that, despite being called “hiring costs per person,” the metric doesn’t actually capture the true total spending.

Why is it important to consider developer time?

We calculate CPH inaccurately because we don’t take into account any time or resource overhead outside of the hiring team (developer time is the biggest one). But does developer time really matter? Of course! For the following three reasons:

  • Developers can spend more time in the hiring process than hiring a recruiter
  • Developer time is more expensive
  • Time spent by developers varies widely

To prove that this is true, let’s look at a typical developer recruitment process (funnel).

We’ll start with the recruiter interview and assume that the cost of searching for a candidate’s resume is fixed. The green arrow indicates the conversion rate between each step (for example, 50% of people will accept the offer and be hired). The gray letters below each step indicate how long a developer or recruiter is required (or both, such as in an on-site interview scenario). And the black number is, based on the conversion rate of the green arrow, how many times does it take to finally make one offer. Let’s say $100 an hour is the cost of a recruiter; And $150 / hour is the cost of a developer.

Is the time developers spend recruiting really that expensive?

Based on the above funnel, we break down the costs of developers and recruiters:

Recruiters — 15 hours total

  • 10 hours of phone interviews (20 sessions X30 minutes per session)
  • 4 hours of on-site interviews (4 X1 hours/session)
  • 1 hour feedback offer (2 calls X30 minutes/time)

It takes a recruiter 15 hours ($1,500) to complete a job.

Developers – total 40 hours

  • 16 hours of phone interview (16 X1 hours/session)
  • 24 hours of on-site interviews (4 sessions X6 hours per session)

It takes a developer 40 hours, or $6,000, to complete a programmer or technical hire. But that’s just on the face of it. In reality, the time spent by developers can be many times that, but this multiple is hidden and not taken into account.

Every time you interrupt a developer trying to solve a code problem, it takes time for him to refocus. If you’re a developer, you know this; If you’re not, you’ve probably heard your engineer friends express their annoyance at this sort of thing because it pains them to refocus.

When I was writing code, I would spend 15 minutes staring at my IDE. Or, occasionally, reading tech blogs or Reddit to give my brain a break after the interview so I can get back to work. Fifteen minutes before the interview, I look at the candidate’s resume and get into the mindset where I want to ask him a code or design question. I wish my focus time was valuable, but basically every hour before or half an hour after an interview, focus is destroyed.

So $9,000 worth of time is wasted just switching back and forth. In the end, the total cost of hiring a technician was $10,500, six times the cost of hiring.

Have you calculated the true cost of hiring a technician for your team or company? You can refer to the above calculation method.