Cost Per Hire Calculator

What is Cost Per Hire (CPH)?

Cost Per Hire is a key HR metric that measures the total expenses associated with recruiting and onboarding a new employee. It helps organizations understand their recruitment efficiency, benchmark against industry standards, and identify areas for cost optimization.

The Cost Per Hire Formula

CPH = (Total Internal Costs + Total External Costs) / Number of Hires

This formula, standardized by SHRM (Society for Human Resource Management) and ANSI, provides a consistent way to calculate and compare hiring costs across organizations.

Internal Costs Include:

• Recruiter salaries: Prorated based on time spent on specific hires
• Hiring manager time: Hours spent reviewing resumes, interviewing, and decision-making
• Interview panel costs: Time of employees involved in the interview process
• Onboarding and training: Initial training programs and orientation costs

External Costs Include:

• Job board and advertising: LinkedIn, Indeed, and other posting fees
• Agency fees: Recruitment agency or headhunter commissions
• Background checks: Employment verification and screening services
• Assessment tools: Skills tests, personality assessments, technical evaluations
• Relocation: Moving expenses, temporary housing, travel for interviews
• Signing bonuses: One-time payments to attract candidates

Industry Benchmarks

According to SHRM, the average cost per hire across industries is approximately $4,700. However, this varies significantly by role:

• Entry-level positions: $1,000 - $3,000
• Mid-level professionals: $4,000 - $7,000
• Senior executives: $10,000 - $40,000+

Tips to Reduce Cost Per Hire

• Leverage employee referrals: Often produces higher quality candidates at lower cost
• Improve job descriptions: Attract more qualified candidates to reduce screening time
• Use AI-powered screening: Automate initial resume review to save recruiter time
• Build a talent pipeline: Maintain relationships with passive candidates
• Optimize your careers page: Reduce dependency on paid job boards