Improve time to hire professionals & executives
The number one reason why people turn down job offers is because they are offered another. 26% of candidates say they left the hiring process because it “took too long”. In the competitive market, first-to-offer has the first pick of talent. If you move slowly, you don’t just lose the best candidates – you also lose revenue.
Evaluation that works
Surface the qualities that matter
Interview flexibility
Their timing, on their device
Better job fit
Better fit, longer stay
First to talent
Secure top candidates quicker
Improve time to hire professionals & executives
The number one reason why people turn down job offers is because they are offered another. 26% of candidates say they left the hiring process because it “took too long”. In the competitive market, first-to-offer has the first pick of talent. If you move slowly, you don’t just lose the best candidates – you also lose revenue.
Evaluation that works
Surface the qualities that matter
Interview flexibility
Their timing, on their device
Better job fit
Better fit, longer stay
First to talent
Secure top candidates quicker
Improve time to hire professionals & executives
The number one reason why people turn down job offers is because they are offered another. 26% of candidates say they left the hiring process because it “took too long”. In the competitive market, first-to-offer has the first pick of talent. If you move slowly, you don’t just lose the best candidates – you also lose revenue.
Evaluation that works
Surface the qualities that matter
Interview flexibility
Their timing, on their device
Better job fit
Better fit, longer stay
First to talent
Secure top candidates quicker
Understanding Cost Per Hire: A Strategic Guide for HR Professionals
- admin
- May 2, 2025
- 4:26 pm
- No Comments
In today’s competitive business landscape, efficient recruitment is crucial. One key metric that helps HR professionals gauge the effectiveness of their hiring process is Cost Per Hire (CPH). This article delves into the intricacies of CPH, its calculation, influencing factors, and strategies to optimize recruitment costs.
What is Cost Per Hire?
Cost Per Hire is a vital HR metric that quantifies the total expenses incurred to recruit a new employee. It encompasses both internal and external costs associated with the hiring process. By understanding CPH, organizations can assess the efficiency of their recruitment strategies and make informed decisions to optimize resources.
Calculating Cost Per Hire
The standard formula to calculate CPH is:
CPH = (Internal Recruiting Costs + External Recruiting Costs) / Total Number of Hires
Internal Recruiting Costs
These are expenses within the organization, including:
Salaries of HR personnel involved in recruitment
Recruitment software and tools
Training and onboarding programs
Employee referral bonuses
External Recruiting Costs
These are expenses incurred outside the organization, such as:
Job advertising fees
Recruitment agency charges
Background checks and assessment tests
Travel expenses for candidates
By aggregating these costs and dividing by the number of hires, organizations can determine their average CPH.
Industry Benchmarks for Cost Per Hire
Understanding industry standards helps in evaluating your organization’s CPH. While the average cost per hire varies depending on the sector, most companies can expect to spend thousands of dollars on each recruitment effort. For example:
Manufacturing:
Typically incurs lower CPH due to higher volume hiring
Healthcare and Social Services:
Moderate to high CPH due to certification and background requirements
Professional and Technical Services:
Often experience the highest CPH due to specialized skill sets
These variations highlight the importance of contextualizing CPH within your specific industry and organizational needs.
Factors Influencing Cost Per Hire
Several elements can impact your organization’s CPH:
Company Size
Larger companies often benefit from economies of scale, potentially reducing the CPH due to streamlined processes and bulk hiring.
Recruitment Channels
The choice of recruitment channels such as job boards, social media, or recruitment agencies, can significantly affect costs. For instance, leveraging employee referrals can be more cost-effective than traditional advertising.
Geographical Location
Recruitment costs can vary based on location due to differences in market competitiveness, cost of living, and availability of talent.
Job Role Specificity
Specialized or senior-level positions typically incur higher recruitment costs due to the need for targeted searches and extensive vetting processes.
Strategies to Optimize Cost Per Hire
Reducing CPH without compromising the quality of hires is a strategic objective for many organizations. Here are some effective approaches:
Enhance Employer Branding
A strong employer brand attracts quality candidates organically, reducing the need for extensive advertising and recruitment efforts.
Leverage Employee Referral Programs
Encouraging current employees to refer candidates can lead to quicker hires and better cultural fits, thereby reducing recruitment costs.
Utilize Technology
Implementing Applicant Tracking Systems (ATS) and other recruitment technologies can streamline the hiring process, saving time and resources.
Optimize Recruitment Channels
Analyzing the effectiveness of various recruitment channels allows organizations to invest in those yielding the best return on investment.
Continuous Process Evaluation
Regularly reviewing and refining recruitment processes ensures efficiency and cost-effectiveness.
Importance of Monitoring Cost Per Hire
Regularly tracking CPH offers several benefits:
Budget Management
Helps in allocating resources effectively and forecasting future recruitment expenses.
Process Improvement
Identifies bottlenecks and areas for enhancement in the hiring process.
Strategic Planning
Informs decision-making regarding workforce planning and organizational growth.
How Cost Per Hire Impacts Business Success
Hiring is not just an administrative task, it’s a strategic investment. High CPH may indicate inefficiencies or outdated practices, while optimized CPH signals a mature, streamlined recruitment strategy. Keeping CPH under control ensures a healthy return on investment for your hiring efforts.
Moreover, a focus on CPH aligns recruitment with overall business performance. For instance, reducing time to fill positions while maintaining cost efficiency ensures your business can scale and respond to market changes quickly.
When to Re-Evaluate Your Cost Per Hire
It’s important to routinely revisit your CPH, especially when experiencing:
Increased hiring volume
High turnover rates
New geographic or departmental expansions
Changes in recruitment tools or strategy
By consistently monitoring this metric, organizations can remain agile and responsive to internal and external shifts in the hiring landscape.
Conclusion
Understanding and optimizing Cost Per Hire is essential for efficient and effective recruitment. By accurately calculating CPH and implementing strategic measures to reduce it, organizations can enhance their hiring processes, attract top talent, and achieve better alignment with their business objectives.
Cost Per Hire is more than just a number, it’s a reflection of how well your recruitment engine operates. With the right data, tools, and mindset, your HR team can turn hiring into a measurable, sustainable, and strategic advantage.
Check out DEUS Discover for strategies to improve your company’s hiring process!
SHARE:
Covers work accidents, retirement, and death insurance.
The standard formula to calculate CPH is:
CPH = (Internal Recruiting Costs + External Recruiting Costs) / Total Number of Hires