Cost-Per-Hire

What is Cost-Per-Hire?

Companies quantify the cost of recruiting and onboarding new hires using cost per hire. It indicates the company's recruiting costs divided by the number of recruits made in a given time. The cost-per-hire estimate usually includes advertising, recruiter wages, application tracking system (ATS) charges, background checks, interview travel, and onboarding costs.

Calculating the cost per hire helps firms evaluate their recruiting procedures, find areas for improvement, and deploy resources more effectively. Lower cost per hire suggests that the business can attract and employ individuals more effectively, whereas more significant costs may indicate recruiting inefficiencies or chances for improvement.

Cost-per-hire tracking helps companies track trends, compare against industry norms, and create realistic recruiting budgets. Understanding the cost per hire helps firms show their recruiting ROI and enhance their talent acquisition initiatives using statistics.

Example Of Cost-Per-Hire

A retail corporation opening more stores needs more salespeople. The organization must account for recruiting costs to compute the cost per hire for these roles. First, the corporation pays for employment ads on Internet job boards, local newspapers, and social media to attract prospects. The figure may also include recruiting agency or headhunter costs.

Interviews, background checks, and pre-employment tests cost money during selection. The employer may pay for applicants' airfare and lodging to attend in-person interviews.After hiring, onboarding expenditures include training materials, orientation meetings, documentation, and IT setup.

The organization may calculate the cost per hiring by adding up all these charges and dividing by the number of sales associates employed during recruiting. This indicator helps the organization allocate resources and optimize future recruiting tactics by revealing its recruitment process efficiency.