What is cost per hire?

Cost per hire is a crucial metric in recruitment that calculates the total expenses incurred to fill a vacant position within an organization. It encompasses various direct and indirect costs associated with the recruitment process. 

How do you calculate the cost per hire?

Here’s a breakdown:

Advertising costs: Expenses related to job postings on job boards, social media platforms, or other advertising channels.

Agency fees: Costs associated with hiring external recruitment agencies or headhunters to source and screen candidates.

Internal recruiter costs: Salaries, benefits, and other expenses for in-house recruiters involved in the hiring process.

Candidate expenses: Reimbursements for travel, accommodation, and other expenses incurred by candidates during the interview process.

Technology and tools: Costs for applicant tracking systems (ATS), recruitment software, or any other technology used in the recruitment process.

Employee referral programs: Bonuses or incentives offered to existing employees who refer successful candidates.

Onboarding expenses: Costs related to training, orientation, and other activities to integrate new hires into the organization.

To calculate the cost per hire, you add up all these expenses and divide by the total number of hires within a specific time frame. This metric helps organizations understand the efficiency and effectiveness of their recruitment processes, allowing them to optimize their strategies and allocate resources more effectively. A lower cost per hire indicates a more cost-effective recruitment process, while a higher cost per hire may signify inefficiencies or room for improvement.