Cost per hire

What is Cost per Hire?

Cost per hire is a key human resources metric used to calculate the total expenses involved in recruiting and hiring new staff. This includes all costs associated with the recruitment process, from advertising job openings and conducting interviews to the administrative expenses of onboarding new employees.

Calculation and Components

The calculation of cost per hire involves summing all recruitment-related expenses and dividing by the number of hires made in a specific period. Expenses typically include advertising and promotion costs for job vacancies, proportionate costs of HR staff time spent on recruitment, expenses incurred when applicants travel for interviews, investments in recruitment software and other digital tools, and costs related to background checks, employee testing, and onboarding processes.

Strategic Significance

Understanding cost per hire is crucial for organizations to evaluate the effectiveness and efficiency of their recruitment strategies. It helps HR departments track financial investments in talent acquisition and make informed decisions about where to allocate resources to improve recruitment processes and reduce costs.

Cost per hire is a valuable metric for assessing the financial impact of hiring practices. By analyzing this figure, companies can identify opportunities to streamline recruitment processes, negotiate better terms with vendors, and ultimately enhance their ability to attract top talent in a cost-effective manner.