CostperHire

Cost per hire is a key performance indicator used in recruiting and human resources to estimate the total cost involved in filling a vacancy. It combines direct monetary expenditures with the internal resources required to attract, assess, select, and onboard a new employee. Common components include external costs such as recruitment agency fees, job advertising, background checks, assessment testing, referral bonuses paid to external partners, and relocation expenses, as well as internal costs such as recruiter and hiring manager time, salaries of HR staff, applicant tracking systems and other recruiting technologies, interview travel, and onboarding and training costs.

Calculation typically uses: cost per hire = total recruiting costs for a period divided by the number of hires in that same period. Costs can be grouped into external and internal categories, and organizations may report cost per hire at the organization level, by department, job family, or geography.

Use and limitations: The metric helps assess recruiting efficiency, budget planning, and the ROI of sourcing channels or programs. However, it does not capture quality of hire, turnover, or long-term performance, and can be distorted by outliers, contractor hires, or differences in how costs are allocated. For that reason, cost per hire is often used with other metrics such as time-to-fill, quality of hire, turnover, and candidate satisfaction to provide a fuller view of recruiting performance.