Cost per hire calculator
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Cost per hire (CPH) calculator
Discover the true cost of recruitment with our cost-per-hire (CPH) calculator, which is aligned with the CPHC Standard. It breaks down in-house and external recruitment costs for better-informed hiring decisions.
How to use the Cost per hire (CPH) calculator
Input internal recruitment costs
Fill your internal hiring expenses, such as consulting services, sourcing expenses, operational costs, bonuses, etc. This calculates your total internal recruitment spend.
Enter external recruitment costs
Add any external expenses, like recruiting costs, agency commissions, internal compliance overhead expenses, etc. These inputs ensure a comprehensive calculation of your hiring budget.
Add the total number of hires
Specify the number of employees hired during the chosen timeframe.
Hit ‘calculate’ to generate your results
Click the ‘Calculate’ button to see your cost per hire within seconds.
What is cost-per-hire (CPH)?
Cost-per-hire (CPH) is a key recruiting metric that tracks the total cost of hiring a new employee. This includes expenses such as advertising costs, recruitment agency fees, employee referrals, and the salaries of HR staff involved in the hiring process.
How does the cost-per-hire calculator work?
The cost-per-hire calculator uses the following formula to calculate the total hiring costs:
Cost-per-hire (CPH)= (External costs) + (Internal costs) / Total number of hires in a period
External recruitment costs: These are expenses involved in hiring from outside sources (outside companies). Examples include salaries for recruitment agencies, advertising fees, recruitment technology, candidate travel costs, and pre-employment screening costs.
Internal recruitment costs: These are expenses involved in hiring from sources within a company. Examples include salaries for HR professionals or recruiting staff, operating internal job boards, rewards for employee referrals, interview costs, recruiter travel costs, etc.
Total number of employees hired: This involves the number of people recruited and onboarded, excluding whether they remained in the company afterward.
This metric is crucial for understanding the efficiency of hiring processes and helps organizations make informed budgeting decisions.
For instance, if a company spends $40,000 recruiting and hiring ten employees, the cost-per-hire would be $4,000. Monitoring CPH over time can also help identify trends and areas for improvement in the recruitment strategy.
Why use a cost-per-hire calculator?
A cost-per-hire calculator is a strategic tool that improves hiring efficiency and supports informed decision-making in HR practices.
Using a cost-per-hire calculator offers several benefits:
• Better tracking: It helps companies track all recruitment costs, including hidden ones, providing a clear view for better budgeting and resource planning.
• Benchmarking: Calculating CPH allows companies to compare their hiring costs with industry standards or competitors to assess the efficiency of their recruitment process.
• Continuous improvement: Regular CPH measurements help HR teams evaluate and improve their hiring strategies by testing different approaches.
• Budget planning: Knowing the average cost per hire helps predict total recruitment expenses, making financial planning easier.
• Identifying improvement areas: Analyzing CPH can highlight areas with high costs, helping companies refine their recruitment processes and reduce unnecessary spending.
Frequently asked questions (FAQs)
Several factors can affect the Cost-per-Hire (CPH):
Position level: Senior-level positions often have higher CPHs due to more complex interview processes and greater involvement of additional staff.
Type of position: Roles that are in high demand, such as engineers, web developers, or data scientists, may result in higher CPHs.
Recruitment strategies: More intensive recruitment strategies for senior or specialized positions can increase CPH.
Employee turnover can significantly impact Cost-per-Hire (CPH) calculations. When a company loses an employee, replacing them can cost anywhere from half to twice the employee’s salary. A high turnover rate means more frequent hiring, which directly increases CPH.
Hiring new employees is more expensive than keeping existing ones. With high turnover, a company faces ongoing costs for job postings, recruitment events, and the hiring process. Additionally, each new hire requires investment in training and onboarding, leading to recurring expenses as turnover remains high.
The Cost Per Hire (CPH) encompasses all expenses incurred in hiring a new employee. These costs are categorized into two primary groups: External and internal.
Here’s a breakdown of each category:
External Costs
• Recruitment Events
• Job Advertising
• Background Screening
• Candidate Travel and Lodging
• Agency and Search Firm Fees
Internal Costs
• Interviewing Time
• Recruitment Training
• Internal Systems
• Employee Referral Bonuses
• Recruiter Salaries