Cost per Hire

What is Cost per Hire?

Cost-per-hire is a human resources metric that measures the total expenditure required to recruit and onboard a single employee. This key performance indicator (KPI) calculates all direct and indirect costs associated with the hiring process divided by the number of new hires during a specific period, providing businesses with insight into their recruitment efficiency and budgeting accuracy.

The cost-per-hire metric includes multiple expense categories such as recruitment agency fees, job posting costs, interviewer time, background checks, skills assessments, and onboarding expenses. It also factors in indirect costs including human resources staff salaries, technology platform subscriptions, and administrative overhead related to the recruitment process.

Organizations use cost-per-hire to benchmark recruitment spending, identify cost-saving opportunities, and evaluate the effectiveness of different hiring channels. This metric enables HR departments to optimize their talent acquisition strategies and allocate recruitment budgets more strategically across departments and job levels.

Cost-per-hire varies significantly across industries, company sizes, and job positions. Specialized or senior-level roles typically generate higher costs due to increased competition and extended recruitment timelines. Tracking this metric over time helps companies understand hiring trends and predict future recruitment expenses.

By monitoring cost-per-hire, businesses can make data-driven decisions about recruitment processes, improve hiring ROI, and reduce unnecessary expenses while maintaining quality candidate selection standards.