Cost Per Hire

Meaning & Definition

Cost per hire is a measurement used by companies to determine how much money they are spending on recruiting new employees. When calculating cost per hire, companies add together all of their expenses related to recruiting (job ads, recruiting agency fees, costs associated with interviewing candidates, time spent by recruiters, etc.) over the course of a certain number of months and divide that total by the number of hires made during that same time period.

Importance of Cost Per Hire

• Organisations will be able to assess the effectiveness of their recruitment expenses and support their budgeting and employee planning decisions.
• Recruiters will be able to compare costs associated with recruiting across specific roles, departments, and hiring channels.
• Organisations can identify areas to improve the overall efficiency of the hiring process and increase their return on investment for acquiring new talent.

Statutory and Policy Alignments 

• Cost components of this term have no specific compliance obligations required financially under Statutes.
• The basis for calculation was through the use of internal recruitment and finance policies. 
• As per policies, cost components must be defined and accurately tracked. 
• Management reviews and audits of accurate cost reports ensure all reported costs are properly accounted for.