Cost Per Hire: Why You Should Replace it in 2022
Hiring Success GlossaryTable of Contents
- What is cost per hire?
- How to calculate cost per hire
- Internal recruiting costs
- External recruiting costs
- Where cost per hire falls short
- Hiring budget
- Why you should replace cost per hire
What is cost per hire?
Cost per hire is a recruitment metric that measures the total amount of money invested divided by the number of hires. For example, if you want to hire 200 people in a given year, and your average cost per hire is $4,500, then you can expect to spend a total of $900,000. Tracking this metric allows you to compare costs year after year to see if there are any significant changes. Recruitment is at the forefront of every company's success, yet we increasingly see a push to reduce the amount of money spent per hire. The most common way companies measure this metric is through a recruitment metric called cost per hire. Cost per hire is a metric that takes into consideration a myriad of costs including advertising, software, relocation expenses and more.How to calculate cost per hire
- Cost per hire = Total recruitment cost / Total number of hires = Total internal cost + Total external cost / Total number of hires
Internal recruiting costs
Internal recruiting costs are any expenses relating to the internal employees of a company and the costs of the recruiting process.- Employee referral bonuses (cash or prizes)
- Recruiter salaries
- Interview costs (The number of hours times hourly salary of involved employees)
External recruiting costs
External recruiting costs are any expenses related to recruiting that do not fall under internal recruitment costs.- Advertising costs (Job boards, PPC)
- Recruiting software
- Recruiting events
- Non-internal recruiter fees (Agency fees)