Cost Analysis Results
| Expense Category | Amount ($) | % of Total |
|---|---|---|
| Internal Recruiting | $250,000 | 37.0% |
| External Recruiting | $180,000 | 26.7% |
| Agency Fees | $120,000 | 17.8% |
| Advertising | $75,000 | 11.1% |
| Employee Referrals | $50,000 | 7.4% |
The Cost per Hire Calculator helps businesses determine the average cost incurred to hire a new employee. Understanding hiring costs is essential for optimizing recruitment budgets and improving hiring efficiency.
What is Cost per Hire?
Cost per Hire (CPH) is a metric used by companies to measure the total expense of recruiting and hiring a new employee. It includes internal and external costs such as job advertising, recruiter salaries, and onboarding expenses.
Cost per Hire Formula
The formula to calculate cost per hire is:
Cost per Hire (CPH) = (Internal Hiring Costs + External Hiring Costs) ÷ Total Number of Hires
Where:
- Internal Hiring Costs: Salaries of recruiters, HR team expenses, software costs.
- External Hiring Costs: Job advertisements, recruitment agency fees, background checks.
- Total Number of Hires: The number of employees hired during the period.
Why is Cost per Hire Important?
Tracking cost per hire helps businesses:
- Optimize Recruitment Budgets: Helps allocate hiring funds efficiently.
- Improve Hiring Efficiency: Identifies areas to reduce recruitment expenses.
- Measure ROI of Hiring Strategies: Helps evaluate the effectiveness of recruitment campaigns.
- Plan for Future Hiring: Provides insights into workforce planning and cost forecasting.
How to Use the Cost per Hire Calculator?
To use the Cost per Hire Calculator, follow these steps:
- Enter the total internal hiring costs (HR team salaries, office expenses, software costs).
- Input the external hiring costs (advertisements, recruitment agencies, background checks).
- Enter the total number of hires during the selected period.
- The calculator will instantly compute the cost per hire.
Factors Affecting Cost per Hire
Several factors influence the cost per hire, including:
- Industry Type: Highly specialized industries may have higher recruitment costs.
- Geographical Location: Hiring costs vary depending on the job market and region.
- Job Role Complexity: Senior and technical positions often require higher hiring expenses.
- Recruitment Strategy: Companies using internal hiring may have lower costs than those relying on agencies.
Conclusion
The Cost per Hire Calculator is an essential tool for HR teams and business owners. It provides insights into recruitment costs, helping organizations improve hiring efficiency and budget management.
Use the Cost per Hire Calculator to track and optimize your recruitment expenses effectively.