Cost per Hire

Cost per Hire

KPI Details

Cost per Hire measures the average recruiting expense required to attract, screen and hire a candidate for a single open position within the company. A higher than average value for this KPI is typically associated with inefficient, and potentially ineffective recruiting and hiring processes; poorly written job requisitions, ineffective candidate screening and improper allocation of costs within the hiring process (e.g., too much spent on marketing job positions through ineffective channels, etc.) can contribute to bloated costs in this area. Excessive hiring costs may indicate that job requisitions are staying open for a long period of time, which impacts organizational capacity, and may also potentially affect work quality, productivity and service levels within certain functional areas that are under-staffed.

KPI Definition

The total cost of recruiting and hiring (labor, job postings, travel costs, etc.) for all open positions (front-line or entry-level staff, managers, directors and executives) divided by the total number of positions filled over the same period of time.

KPI Best Practices

• Promote employees from within the company
• Ability to effectively identify and recruit the right talent for job openings (low Time to Fill)
• Clear descriptions of open positions in advertisements and job postings

KPI Calculation Instructions Cost per Hire?

Calculate the expenses incurred that relate to filling open job requisitions within the organization. This number should then be divided by the total number of open job requisitions filled (i.e., number of new hires) during the measurement period. Include expenses related to advertising and marketing of open requisitions, employer branding, third-party recruiting agencies, traveling expenses for recruiters and/or candidates, background checks, drug screens, HR-related hiring costs (recruiting software, etc.), recruiting and sourcing staff compensation (salary, benefits, commissions) and any government compliance-related activities for new hires in this calculation. Do not include compensation for new hires, training for new hires, or cost of turnover in this calculation. Include full-time, part-time, and temporary hires in this calculation. Include both internal (i.e., hires from within the company) and external hires in this calculation. Define a hire as a candidate who signs an official offer letter and subsequently begins employment with the organization (external hires) or takes another position within the company (internal hires).

KPI Formula :

Total Recruiting Costs / Number of Open Positions Filled