How to Calculate Cost-Per-Hire [Infographic] - Glassdoor for Employers

How To Calculate Your Cost-Per-Hire

Cost-per-hire is arguably the most important metric for talent analytics. Knowing your cost-per-hire is important because when you know your cost-per-hire, you can better determine where to invest your recruiting budget. These strategic recruiting decisions can potentially save your company money and attract better candidates.

Because so many factors go into recruiting, it can be difficult to calculate an accurate cost-per-hire across your organisation. In our Glassdoor eBook, Talent Analytics For Dummies, Glassdoor Special Edition, we share this formula for calculating recruitment costs.

Here's how to calculate your cost-per-hire (CPH) for new employees:

Infographic How to Calculate Cost Per Hire and Hiring Costs

What is Cost-Per-Hire?

By definition, Cost Per Hire is a sum of the resources spent in recruiting a single employee to your organisation. This can include external recruiting costs like job sourcing, background checks, job boards, and marketing costs. This also includes internal hiring costs for your in-house recruiting staff, any referral rewards, and ATS systems.

Average Cost of Hiring an Employee in the UK

The average cost of recruitment for a new employe in the UK is £3,000. Knowing this metric in your organisation can help you make more strategic decisions lower recruitment costs £3,000. Knowing this metric in your organisation can help you make more strategic decisions lower recruitment costs.

Why is Cost-Per-Hire Important?

Calculating your cost-per-hire is important because it can help you make smarter hiring cost decisions, save your company money, and even optimise a specific program (such as a referral bonus plan). Without this metric, you can't accurately measure and report on your efforts in pursuit of talent.

Three Things You Can Do With Your Hiring Cost Data:

1. Benchmark your company against the overall average and your industry peers. Download the Bersin by Deloitte Talent Acquisition Factbook for industry recruitment cost benchmarks.

2. Analyse recruitment cost data by department and position type. Use this information to determine what factors could lower the hiring cost for specific groups.

3. Compare your CPH against source of hire. This information gives you a better picture of which job advertising outlets work best. For accuracy in tracking source of hire, we recommend using technology-based tracking features, such as those embedded in an ATS.

For more tips and ideas on how to optimise hiring costs and get the most out of talent analytics, download our eBook Talent Analytics For Dummies today!