Cost per hire

What goes into the calculation?

Two buckets. Internal costs: recruiter and coordinator time, hiring manager interview hours, referral bonuses and the recruiting share of systems. External costs: job boards, agency fees, background checks, assessments and advertising. Divide the total by hires made in the same period. Most organisations that think their cost per hire is low are simply not counting the internal bucket, which is usually the bigger one.

How should the number be used?

As a trend and a mix signal, not a leaderboard. Agency-heavy hiring shows up immediately, as does a career-site channel that quietly produces the cheapest good hires. Compare like roles with like: executive search legitimately costs multiples of a frontline hire, so blend rates only at the whole-function level and manage by role family underneath.

The trap in minimising it

Cost per hire is the easiest recruiting metric to game and the least connected to value. Cutting assessment steps, compressing interviews and taking the first acceptable candidate all lower the metric while raising the probability of a mis-hire whose cost dwarfs the saving. Pair it with quality-of-hire signals (first-year retention, time to productivity, hiring manager satisfaction) before drawing any conclusion.