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Spending on talent acquisition up 7% to nearly $4,000 per hire, study says

April 23, 2015

Driven by increased competition for talent and a shortage of critical skills, US companies increased talent acquisition spending 7% on average year over year in 2014 to nearly $4,000 in cost per hire, according to new research from Bersin by Deloitte.

Spending focused on professional networks at the expense of agencies, according to the research. Allocations to professional networking sites tripled to account for 12% of recruiting budgets on average in 2014, up from 4% in 2011. In contrast, agencies and third-party recruiters claimed 18% of the recruiting budget in 2014, down from 38% in 2011, as organizations switched their investments to a variety of less costly channels, including professional networks.

“At a cost of nearly $4,000 on average to fill an open position, US companies are spending nearly three times the amount spent on training per employee,” said Karen O’Leonard, VP, benchmarking and analytics research, Bersin by Deloitte, Deloitte Consulting LLP. “As the economy continues to rebound and the job market becomes more transparent than ever, organizations recognize that spending money strategically on recruitment, employment branding, sourcing and the entire candidate experience is critically important.”

Company websites drive more hires than other sources, followed by job boards and internal candidates, according to the research, and 10% of open positions are filled using professional networking sites — the same percentage as in 2011.

“Job candidates now routinely use company websites to assess a firm’s strengths and help determine whether they would be a good fit with an organization before even applying for a job,” said Robin Erickson, VP, talent acquisition research, Bersin by Deloitte, Deloitte Consulting LLP. “This suggests that while candidates may learn about a company or a particular job opening through networking sites or social media, they typically apply for jobs via company websites. These factors make employment branding and ease of website navigation critical aspects of ensuring an excellent candidate experience during the application process.”

Additional study results:

  • Overall, companies find it takes 52 days on average to fill open positions — up from 48 days in 2011.
  • Healthcare organizations had the largest increase in spending among industries at 16%. Healthcare also saw the largest new-hire turnover at 17% compared with 10% turnover among manufacturing firms.
  • The most mature recruiting organizations — those considered strategic enablers of the business and where talent acquisition leaders have an active and influential “seat at the table” — spend $6,465 per employee, on average, as compared with $3,258 among those organizations at the lowest level of maturity with reactive, tactical recruiting. However, high-impact organizations have 40% lower new-hire turnover and fill vacancies 20% faster than companies with tactical recruiting functions.

The study includes responses from 412 organizations and was conducted via online surveys.

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