Hiring new employees always comes with a price tag, but what’s the actual cost? Enter cost per hire (CPH)—a key recruiting metric used to determine the average cost a company incurs to bring in a new employee.
Understanding this number lets you gauge your hiring process’s effectiveness, helping you optimize your recruitment budget for better efficiency and resource allocation in the long run.
A low cost per hire combined with top performance from new employees reflects efficient hiring processes, for example. On the flip side, a high cost per hire paired with low performance or a high attrition rate might suggest underlying issues in the recruitment process.
Want to know your CPH? Use our free cost per hire calculator to find out where in the hiring process you can cut costs, where you can invest more, and how to optimize your talent acquisition strategy for maximum ROI!
Free Cost Per Hire Calculator
Cost per hire doesn’t just include new hire salaries; it covers all expenses tied to recruitment. To calculate it, you need three numbers—all of them from a single time frame (for instance, last month or your last fiscal quarter):
- Internal recruitment costs—Expenses involved in hiring from sources inside the company. Examples include salaries for recruiting staff, operating internal job boards, recruiter travel and interview costs, and rewards for employee referrals.
- External recruitment costs—Expenses involved in hiring from sources outside the company. Examples include advertising fees, recruitment technology, pre-employment screenings, and candidate travel.
- Total number of employees hired—Number of people who were successfully recruited and onboarded, regardless of whether they remained with the company afterward.
Input these numbers into the cost per hire calculator to see how much money (and valuable time) you’re spending on hiring.