Cost Per Hire
Cost per hire is the total cost of filling a position, including advertising, agency fees, recruiter time, and onboarding expenses.
hr-metrics
Category
intermediate
Difficulty
5 min read
Read time
2025-01-15
Updated
Definition
Short definition
Cost per hire is the total cost of filling a position, including advertising, agency fees, recruiter time, and onboarding expenses.
Detailed explanation
Cost per hire measures the total investment required to recruit and onboard a new employee. It includes both internal costs (recruiter salaries, time spent interviewing) and external costs (job board fees, agency fees, background checks).
Understanding cost per hire helps organizations budget for growth, evaluate recruitment channel effectiveness, and identify opportunities to improve efficiency.
The metric should be analyzed by role type, source, and department for meaningful insights.
Practical guidance
How it works
Sum all recruitment costs for a period. Divide by number of hires. Analyze by role type and source for meaningful insights.
Best practices
Track consistently over time
Segment by role and source
Include all relevant costs
Balance cost with quality
Calculation details
Formula
Cost Per Hire = (Internal Costs + External Costs) / Number of Hires
Variables
I: Internal Costs
E: External Costs
N: Number of Hires
Worked example
(50000 + 100000) / 25 = £6,000
Result: Cost Per Hire: £6,000
Frequently asked questions
What is a reasonable cost per hire?
This varies significantly by role level and industry. Entry-level might be £1,000-3,000, professional £5,000-10,000, and executive £20,000+. Agency fees significantly increase costs.