Which pair of actions best reduces Cost per Hire?

• A. Maximize Employee Referral programs; Invest in building a strong Employer Brand to attract organic talent.
• B. Increase reliance on external agencies and paid advertisements.
• C. Shorten screening duration without changing sourcing.
• D. Hire only from universities.

Answer: (A)

Cost per hire is driven by how efficiently you can fill the funnel with qualified candidates and how much you spend on sourcing and screening. The best approach builds a steady flow of high-quality applicants at low cost, and reduces reliance on expensive channels. Maximizing employee referrals and investing in a strong employer brand accomplish exactly that: referrals provide naturally pre-screened candidates with a higher likelihood of fit, which lowers sourcing and early screening costs, while a solid employer brand attracts applicants organically, cutting spend on paid ads and external agencies. The combination expands the candidate pool in a cost-effective way, speeds up time to hire, and often improves retention, all of which lowers the cost per hire.

Relying more on external agencies and paid advertisements increases direct recruiting costs, making the metric higher. Shortening screening duration without changing sourcing might shave some recruiter time, but it doesn’t address the costliest part—obtaining enough quality applicants—so gains are limited and may risk quality. Hiring only from universities narrows the candidate pool and may miss higher-quality hires elsewhere, not reliably reducing costs.