cost per hire, CPH

What is Cost Per Hire?

Cost Per Hire is one of the many KPI metrics we use in the recruitment industry and arguably one of the most important, but there is also Time to hire, drop off rates, attrition rates and many, many more. This metric, in particular, gives us the average amount of money we spend on each hire.


Why Should We Track CPH?

Tracking our KPI’s is essential to learn how to work more efficiently in the future to ensure that we are on the road to success. Its enables us to evaluate our recruitment spend, set budgets and hopefully save some money! 


How do we work out CPH?

It is worth noting that this will be different for everyone. According to Glassdoor, the average employee cost in the UK is £3,000, but the overall spend will really differ company to company as different needs will require a different level of resources.

The first step in the process is to evaluate all of your recruitment costs, both internally and externally.

For example:

Internal costs may be in-house recruitment, recruitment resources such as an ATS, internal recruiters, referral schemes, onboarding and so on.

External costs may be marketing, job advertising, recruitment events, contractors, pre-hire assessments, eligibility checks such as a DBS check, technology and so on.

When you believe you have calculated them all, you need to divide the total of your internal and external costs by the number of hires made in a specified period to calculate your cost per hire.


Internal Costs & External Costs

CPH = —————————————

Total No Hires in a Specified Period


Now you know your cost per hire… How Do We Set a Recruitment Budget?

Calculate how many hires you make in a given period whether that be monthly, quarterly or annually and multiply this number by the cost per hire. This will give you a ballpark figure. You can then use it to see a budget per hire for your specifies period or for a specified role.


Extra Tips?

  • Use Recruitment Technology such as an ATS to accurately Track and Report your data
  • Calculate the average no of hires your recruiters can make in a specified period
  • Set Attrition Rate Targets – Try to aim for no more than 15%
  • Find out the No of Employees You Need to Stay the Same Size by multiplying Your Retention Rate by Your Total No of Employees. This will also help you get to gauge how many you need to grow.
  • Find Out the Average No of Applicants You Receive
  • Gauge employee loyalty by finding out the Average Time An Employees Stays Within the Company


Need more support setting recruitment targets? Get in touch today, our solutions may be able to help!

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