What is Cost-Per-Hire?

Cost-per-hire is one of the most important metrics in recruitment. Cost-per-hire measures how much it costs a company to fill an open job position. It includes all the costs associated with filling a position, such as advertising expenses, recruiting events costs, recruitment software fees, relocation expenses, etc. 

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What is cost-per-hire: Definition

Cost-per-hire is one of the most important and most commonly used hiring and recruiting metric.
Cost-per-hire is linked to recruiting talent and refers to the total cost of bringing the new employee to the company, including the expense of recruitment process, equipment, travel costs, administrative costs and benefits. 

Cost-per-hire determinants

Cost-per-hire can apply both to internal promotions within the organization or transfers, as well as new hires recruited from outside the organization.
The cost-per-hire depends on the size of the company, the seniority of the position being filled and the strength and efficiency of in-house recruiting. 

How to calculate the cost-per-hire?

According to an American National Standard for calculating cost-per-hire, in order to calculate the average cost-per-hire, you should follow 2 steps:

  1.  Add up all the costs of hire (internal and external)
  2. Divide that sum by the number of hires in a certain time frame

A formula for calculating a cost-per-hire

Here is the formula for calculating a cost-per-hire:

Thus, cost-per-hire includes all the costs associated with filling a position, whether internal (such as employee referral incentives, recruitment software fees, etc.) or external (such as advertising expenses, recruiting events costs, relocation expenses, etc.).

Learn more about cost-per-hire

For more information about cost-per-hire, check out our blog post Recruitment Metrics: Cost-per-hire.

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