The cost for companies to hire someone seems like the kind of thing that an HR department should know. It would allow firms to identify which parts of the recruiting process generate the most expenses and help identify problem areas to focus on. It would also allow companies to benchmark themselves against their peers and determine whether they were spending more (or less) on average to hire someone, and thus indicate how efficient and effective their recruiting function actually was.
Unfortunately, measuring and calculating cost-per-hire (CPH) is difficult. This is because there are a variety of costs that must be taken into account which typically aren’t tracked through standard hiring systems like an applicant tracking system or job board. Further, there is no official standard about what specific costs should be included in the CPH calculation, and thus, even for companies that want to measure this metric, they likely use vastly different cost inputs. (In other words, two companies may actually have the same CPH, but since they use different methodologies to measure, the calculated CPH for each company may be different).With costs that need to be accounted for through your #ATS or job board, calculating your #CostPerHire can be tough. Dive into @TalentTechLabs's Provider Insight Report to get a full picture of hiring costs: Click To Tweet
Last, average CPH varies based on the role being hired for, meaning that to be truly meaningful, CPH should be calculated at a certain level of granularity and similarity in job function (i.e. the CPH for senior executives with decades of experience is going to be dramatically different than the CPH for entry-level salespersons).
Calculate your CPH with this tool
In our latest Provider Insight Report, we propose a set of common costs that should be included in calculating cost per hire for early career professionals and describe how to collect and calculate each of these costs. Separately, we’ve put together a spreadsheet that companies can use to calculate their cost per hire. We hope this framework and tool help you benchmark your CPH and make better decisions to improve your recruiting process.
Click here to download Calculating Cost-Per-Hire For Early Career Professionals.