Think of staffing as a business process with a yield to manage and the metrics emerge.
Here are a few that quickly come to mind:
Waste & rework – 90 day voluntary turnover, offers rejected
Rejects & defects – 90 day involuntary separations
Variation – range of productivity from best to worst of new hires
Cycle time – opportunity cost of vacancies (think line down in manufacturing terms)
Cost to finished product – investment to achieve job proficiency (time and dollars)

In a poll recently conducted on a BLR webcast, 57% of respondents stated they did not measure and track 90 day turnover. That is akin to manufacturing not reporting on waste. That just does not happen in manufacturing, but in recruiting it is the norm.

88% of respondents stated they did not measure and report on new hire performance variation. That is akin to manufacturing not reporting on quality variation.

There are much better metrics than CPH. But data would suggest, HR practitioners have not adopted them….yet.

Here is a place to read more on some of these matters.
http://www.shakercg.com/blog/2012/04/lessons-from-lake-wobegon-and-quality-of-hire/

Thanks, and keep writing John
.

Firstly, we shouldn’t knock the idea and reasons behind measuring CPH as this article seeks to do. Recruitment doesn’t exist in a vacuum and we should always be mindful of cost. Businesses do not exist to support recruitment functions, rather the other way around.
Businesses must generate profits, and high costs in recruitment negatively effect this. Fact. Ergo it is reasonable to minimise cost (assuming a satisfactory level of recruitment is achieved). Measuring CPH is not “the single most damaging” exercise in recruitment. Of course it isn’t.

Secondly, you say the recruitment fee of LeBron James is irrelevant. No it is not. I have no idea who LeBron is (I hope it’s not a real name), but the cost of a player is critical, otherwise they would cost $100billion, OR $200b. Heck why not a Trillion Dollars? Of course the cost is relevant. The recruitment is not the end goal, the club making a profit and staying in business is the end goal.

Third, you say Apple employees generate over $2.2m revenue each. NO THEY DO NOT. They generate that on average. But the junior intern is not adding $2m of value to the business. Of course not. Whereas the guy who designed the iPod is generating far more value. It’s an average. Therefore if some employees are generating a much more modest return on investment then the costs associated with hiring them become incredibly relevant.

Lastly, this article assumes measuring quality of hire is possible, even easy. It is not. It is so completely subjective as to be almost meaningless.

I appreciate that this article means well, and the point it should make is that CPH is not the only metric worth measuring. But in making this point I’m afraid you have made some really crazy statements John that need to be addressed.
Recruitment can not and does not exist in a bubble where it is immune to economics.
The cost per hire is a very important metric, and should be studied and reported on. It is the interpretation of this that is sometimes mis-handled, but it remains crucial.

First, I would like to know how you are measuring cost of hires.

Try factoring the cost of NOT filling a position as well as the cost of a not so good hire. I will make the presumption that as a financially focused organization, you look at the direct costs associated with a hire-i.e recruiting fees, employee (including management time) time taken to do the interviews and of course the the HR time taken to onboard the new employee.

My experience (10+ years in the recruiting industry) says that this approach usually entails driving down the recruiting fee structure and increasing the warranty period with the recruiters you FINALLY sign. Most likely, not the best recruiters you can retain.

Try this. On a $2MM quota in software, each week the position is open costs the company about $30,800 in GP. On hardware, figure about $20,000 GP. Put those numbers into your cost of hire and see what the impact is to the company bottom line.

Davis

Cost
Speed
Quality

On the cost side it comes down to two simple measurements.

(1) Operating Income = Since Recruiting is a core services function and is a cost center, then how can you keep the OI optimal given it directly impacts margin/profit of the company.

(2) Lost Opportunity = How much money (Revenue) are we leaving on the table as a company if a position is left open for a period of time.

In both instances Cost Per Hire or any or metric and analysis that allows us (Recruiting) and the business to understand where are the opportunities to lower the cost to serve or optimize the ROI by sourcing channel if key. This is because it helps:

a)Ensures you are running an optimal recruiting organization in support of the business needs.
b)Helps frame a conversation with the business based on facts/data which can help level set expectations or help change behaviors to improve in these areas.

While I agree that you should not make the focus all about cost, to not looking at it would be a crazy as someone opening a business and expecting to make a profit if the outgoing is more than the incoming.

The third measurement that I did not include above given the metric would be PPH (Profitability Per Hire) vs CPH and significantly impacts profitability is Quality………but that is an article in its own right and has been written about philosophically by many before.

the idea is to get clients looking at the marketing activity that drives the best quality applications with the best ROI and the LEAST applications. then we can look to re-invest the money we save into building the employer brand… which should make sourcing the best talent easier

we’d love to be able to link this to deeper ROI however a lot of companies are still using their ATS drop down info to analyse marketing and sourcing effectiveness, which is not an accurate measure of what messages and media candidates have been influenced by on their decision journey. CPH is an useful first step to help make the whole recruitment process more accountable.

it should however evolve on from just measuring CPH; the candidates decision journey is complex so, unfortunately(!), the measurement method will need to be complex as well