Cost Per Hire, along with Time to Hire, Attrition Rates, and an abundance of other hiring metrics are highly valued in the recruitment industry to evaluate our methods, making it clearer the areas that are not working, so we can work smarter in the future.
In particular, Cost Per Hire, a metric we’ve been using for decades, allows us to evaluate our recruitment investments. Important as recruitment can often return a hefty bill.
Knowing this figure can then provide the data for HR Professionals to set a future budget.
According to Glassdoor, an employer will spend an average of £3,000 and 27.5 days to hire.
So how do you work out your cost per hire?
First, you need to look at both your internal and external costs.
Taking these costs into consideration, you now need to divide the amount you are spending on your recruitment (Internally & Externally), by the number of hires made in a specified period to give you your cost per hire.
Internal Costs & External Costs
CPH = ---------------------------------------
Total No Hires in a Specified Period
Then consider how many hires you make in a given period or every year. Multiply this by the cost per hire, and then you will also have your ballpark figure so you can set both a budget per hire and per period as different roles may acquire different recruitment costs.