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 cost associated with filling a position, such as advertising expenses, recruiting events costs, recruitment software fees, relocation expenses, etc. 

what-is-cost-per-hire

What is a 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 cost 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:
How-to-calculate-cost-per-hire

Thus, cost per hire includes all the cost 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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