Cost-Per-Hire. The holy grail of recruiting and the statistic against which most everyone is compared in driver recruitment. Ironically, it's also the most abused, misrepresented, and misunderstood figure in the industry.
What's a good Cost-Per-Hire (CPH)? Most people who ask us this question do not know the answer for their own businesses. Or at the very least, they tap dance around anything definitive or remotely close to accurate when pushed on a number. But it doesn't stop the fixation with CPH comparisons among trucking companies.
Cost-Per-Hire is a good stat. And an important one. I won't argue against it here. It's the use of CPH – or misuse – that firms its ironic position as one of the most frequently referenced but poorly tracked stats in the industry. With too many companies not knowing for certain what their own numbers are and other companies simply tracking it differently, there is no accurate apples-to-apples way to compare. Here are just a few things that muddy the CPH comparison playing field:
- Cost assignment: What costs do you consider within your CPH? Are they the same for everyone? Probably not.
- How strong is your program? If you have to overcome laughter when you mention your pay, your CPH will suffer in comparison to others.
- How good are your recruiters? The best recruiters can sell the worst company. The converse is true, as well.
- What are your hiring standards? If you're just looking to warm a seat, you can dazzle people with a low CPH. If you're looking for more, you may hire better drivers but kill your CPH comparisons.
So what to do with CPH?
First, take a long look at what you consider to be your actual Cost-Per-Hire. Do you have the figure tracked on a monthly basis for the past six months? Is it written down somewhere? If not, then you're not tracking it ... you're just occasionally referencing it. If you do have one (or if you're just starting), re-examine everything about your perceived CPH. Determine the components you want to include and write them down. Spend some time thinking about each of the pieces and make sure you are including (or excluding) everything you want, because you don't want to change drastically moving forward. Additions will be factored in parallel to your baseline CPH.
Next, look at the items and actions you're tracking and segment them to individual paths. By isolating costs associated with generating driver applications, you can affect change on them and see the results individually instead of as a homogenized grouping that includes costs of orientation, recruiter salaries, etc. Ultimately, these will roll up into your CPH, but it's critical to know where you can improve efficiencies within the system. Examples of segmentation within CPH might be groupings for pure advertising costs, groupings for recruitment department salaries, groupings for background investigation costs, etc.
Finally, write your CPH down. Create a spreadsheet. Put it on a poster. Whatever you need to do, just make sure it's tracked. What's measured is managed, as they say. But ... and this is the most important part ... measure only against YOURSELF. Resist the urge to compare with other companies or 'the industry' whatever that means. CPH is a benchmark stat for you to challenge yourself and your staff against. It's not worth the frustration to look externally for comparisons. The name of the game is to beat own best performance and repeat.
If you are a CEO or CFO, take note, too. Generally, CPH comparisons start from the top. In most cases where our clients have been asked to review their Cost-Per-Hire it was because their CEO talked to a counterpart at another company and wanted to know how they stacked up. The reality is that most of the time the CPH being communicated in these cases is not accurate and certainly not comparable on an apples-to-apples basis, as no two companies measure it the same way, IF they truly measure it at all.
Cost-Per-Hire is a powerful statistic, but one that should be used for internal improvement and tracked with other critical benchmarking data throughout the organization. But it should be a comparison that is conducted within your organization and not outside of it. CPH is not a pass/fail comparison grade. It is a performance enhancement tool which – when used properly - can be one of the best ways to continually improve your driver recruitment efforts and control costs.