When it comes to understanding the cost of recruiting and hiring the talent you need, Cost Per Hire (CPH) is one of the most important guidelines organizations should be examining. The recruitment process itself is the top priority, where understanding submission-to-acceptance, acceptance-to-interviews, and interviews-to-hire are criteria that inform a company of trouble spots in recruitment. CPH is a way to understand the overall efficiency.
While it's not a strict rule, it serves as a valuable guideline for organizations to estimate their recruitment expenses. This is particularly important in the government sector, where cleared jobs come with their unique challenges and costs. The supply of cleared professionals is choked off due to many factors, while the demand continues to rise exponentially. This imbalance causes a shift to the price curve or salaries needed to attract and retain qualified cleared resources. This in turn adds to the CPH figure; a number that has been increasing for over a decade in the cleared space.
Let’s delve into the intricacies of CPH for cleared jobs, exploring the factors that contribute to it and why understanding it is crucial for organizations.
Understanding Cost Per Hire (CPH)
CPH is a critical parameter in talent acquisition, offering insights into the total expenditure organizations should expect to incur during the recruitment and hiring process and providing a baseline to determine the return on investment (ROI).
The average CPH for professionals in the US can vary depending on various factors such as the industry, location, level of the position, and recruitment methods used. However, according to the SHRM, the average CPH for uncleared professionals in the US typically ranges from $4,000 to $7,000. Organizations need to keep in mind that this is just an average and individual costs may vary. This $7,000 should be understood as a starting point for cleared CPH, as the location is typically in the DMV and this area carries a higher wage need.
CPH encompasses a wide range of costs that organizations must factor in when bringing new talent on board. These costs include:
Job Advertising: Expenses related to advertising the job opening, including job boards, social media platforms, or other fees.
Recruitment and Staffing: Costs associated with the recruitment process, such as hiring internal or external recruiters, or engaging a staffing agency in addition to your existing team.
Screening and Assessment: Expenses for conducting background checks, skills assessments, pre-employment tests, and any other screening methods used to evaluate candidates.
Interviews: Costs related to conducting interviews, including travel expenses for candidates or interviewers, video conferencing tools, and any other associated costs.
Onboarding: Expenses associated with onboarding new hires, including orientation materials, training programs, and any other resources needed to integrate the new employee into the organization.
Technology and Tools: Costs of utilizing applicant tracking systems (ATS), recruitment software, or other technology platforms to streamline the hiring process.
Internal Resources: The time and effort invested by the HR team, hiring managers, and other personnel involved in the recruitment process including your HR Recruitment management organization.
External Services: Costs for external services such as background checks, reference checks, drug tests, or any other third-party services utilized during the hiring process.
Sign-on bonuses/relo: Costs for sign-on bonuses and any type of relocation should also be included as they typically come from a different bucket than an operating unit's overhead.
These factors vary depending on the organization's practices, industry, and the level of the position being filled. However, when it comes to clearance jobs within the government industry, the additional element of security clearance must be considered.
Clearance Levels and Their Impact on CPH
In the government sector, different levels of security clearances carry varying degrees of importance and hence additional costs when it comes to recruitment.
Top Secret (TS): A TS clearance demands a premium of approximately 20% over non-cleared professionals. The extensive background checks and rigorous vetting processes contribute to this cost.
Small Compartmentalized Information (SCI): An SCI clearance commands an additional 15% premium over the TS clearance due to the sensitivity of the information accessed.
Polygraph Levels (CI and FSP): Clearances requiring polygraph examinations, such as Counterintelligence (CI) or full-scope polygraph (FSP), carry an extra 10-20% premium. These clearances are rare and in high demand, contributing to the increased cost.
Because of the rarity of ascending clearance levels (and descending supply), these professionals take more resources to recruit and hire. Because of that, the CPH increases as well. Below is a simple example of ranges of expected CPH by clearance level and what organization should expect to spend:
TS - $14,000 to $18,000
TS/SCI - $18,000 to $24,000
TS/SCI CI poly - $22,000 to $30,000
TS/SCI FS poly - $25,000 to $35,000
When hiring a third-party recruitment firm, there will then be a premium placed on these numbers as these are internally controlled numbers with no ‘profit’ or overhead accounted for by the recruitment firm performing the service. A 20% placement fee is certainly a realistic number that a firm should be comfortable with paying, but it could be more and likely will increase over time, due to the rarity of these skills and clearances.
The Challenge of Clearing New Personnel
One significant challenge in the government sector is the time-consuming process of obtaining security clearances for new personnel. This contributes to the shortage of cleared professionals and further escalates the premium associated with these clearances.
Another factor driving up the cost of clearance jobs is the intel sector's increasing reliance on Commercial-Off-The-Shelf (COTS) solutions like Amazon Web Services (AWS). Professionals certified in these platforms, when combined with high-level clearances, can demand substantial salaries and compensation packages, due to the shortage of supply of these professionals but the ever-increasing market demand.
The Premium for Rare Skills
Certain skills within the clearance job market carry a significant compensation premium due to their rarity and the growing demand for them. These skills include:
Data Analytics/Big Data (Data Scientists)
Cloud Computing
Development Operations (DevOps or Infrastructure as Code)
Cybersecurity
Software Development Expertise
The shortage of professionals with these skills, coupled with a rapidly increasing demand, has shifted the compensation curve dramatically. It's not uncommon for individuals possessing these skills to command salaries ranging from $200,000 to $300,000.
Calculating the CPH for Clearance Jobs
Considering all the aforementioned factors, the CPH for professionals with Top Secret (TS) clearances is estimated from approximately $14,000 to $18,000, depending on the market conditions. When rare skills (listed above) are factored in, this cost can increase by up to 30%, reaching a range of $18,000 to $23,000 or more. For positions requiring a full-scope polygraph (FSP) and these rare skills, the CPH is significantly higher than what is listed above.
Implications for Organizations and Recruitment Firms
Understanding the CPH for clearance jobs is vital for both organizations and recruitment firms. It allows organizations to plan their budgets more effectively and make informed decisions about their hiring strategies. In the realm of clearance jobs within the government sector, understanding CPH is even more critical due to the additional costs associated with security clearances, the scarcity of certain skills, and the growing demand for those skills.
The CPH has grown so quickly many organizations can’t keep up and most are inadequately funded (as recruitment is a cost center) to deliver the results the business needs.
Here at Cleared Recruiters, we help our clients with recruiting and hiring top security-cleared professionals, with our experienced team of recruiters and our large, proprietary database of candidates with federal security clearances. Get help with your cleared recruiting here.