๐๐ง๐๐๐ซ๐ฌ๐ญ๐๐ง๐๐ข๐ง๐ ๐๐จ๐ฌ๐ญ ๐๐๐ซ ๐๐ข๐ซ๐โ๐๐ง๐ ๐๐จ๐ฐ ๐ญ๐จ ๐๐๐๐ฎ๐๐ ๐๐ญ
- Tony Alexander
- Apr 10
- 2 min read
Hiring new talent is essential for any growing business, but the process can be costly. That's where Cost Per Hire (CPH)ย comes inโa vital recruitment metric that helps organizations understand the true cost of hiring new employees.
๐ What is the Cost Per Hire?
Cost Per Hire (CPH)ย is a human resources metric that measures the average expense a company incurs to hire a new employee. It includes both internalย and externalย costs associated with the recruitment process.
๐ผ Internal Costs
Salaries of recruiting staff
Employee referral bonuses
In-house recruitment software
Time spent by managers and team members in interviews
๐ External Costs
Job board postings
Recruitment agency fees
Background checks and assessments
Employer branding campaigns
Onboarding and training resources
The formula is simple:
The CPH formula is a powerful tool that can provide valuable insights into your recruitment costs. It's simple yet effective: CPH = (Internal Recruiting Costs + External Recruiting Costs) / Number of Hires
For example, if your total recruiting costs are $50,000 and you hired 10 people, your cost per hire is $5,000.
๐ก Why Does CPH Matter?
Budgeting: Helps allocate and control recruitment spending
Efficiency: Reveals how effective your hiring process is
Benchmarking: This lets you compare against industry standards or previous years
๐ป 7 Ways to Reduce Your Cost Per Hire
Reducing your CPH is not just a task for the HR departmentโit's a collective effort that involves everyone in the organization. It's about optimizing your recruitment process. Here are some actionable strategies:
1. Strengthen Your Employer Brand
Top candidates are drawn to companies with a compelling mission, strong values, and a positive workplace culture. Investing in your brand can reduce reliance on paid ads or third-party recruiters. Thisย could involve showcasing your company culture on social media, participating in community events, or creating engaging content about your company's mission and values.
2. Build a Talent Pipeline
Instead of starting from scratch each time, maintain a pool of pre-qualified candidates. Thisย lowers sourcing time and reduces urgent (and expensive) hiring needs.
3. Leverage Employee Referrals
Encourage your team to refer candidates. Referrals are faster to hire, cost less, and often stay longer.
4. Use Data-Driven Recruiting Tools
Invest in Applicant Tracking Systems (ATS)ย and AI-powered tools that efficiently automate repetitive tasks and screen candidates.
5. Optimize Job Descriptions and Postings
Transparent, inclusive, and well-targeted job descriptions attract the right candidates faster, saving time and money.
6. Conduct Virtual Interviews
Remote interviews reduce travel costs and accelerate the hiring timeline. Consider using structured video interviews to maintain consistency.
7. Improve Onboarding Efficiency
A streamlined onboarding process ensures new hires are productive sooner, reducing the "hidden" costs of delays and disengagement.
๐ Final Thoughts
Monitoring and managing Cost Per Hireย is essential for sustainable growth. By taking proactive steps to improve your recruitment strategy, you save money andย attract better talent, boost retention, and build a more resilient organization.
Want help evaluating or lowering your hiring costs? Let's talk strategy. ๐ฌ
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