Cost Per Hire (CPH) is a metric used to measure the cost of recruiting and hiring a new employee. It is used to measure the efficiency of the recruitment process and to identify areas where cost savings can be made.
The formula for Cost Per Hire is:
Cost Per Hire = (Total Recruitment Costs / Number of Hires)
It is calculated by dividing the total recruitment costs (including advertising, staffing agency fees, travel expenses, background checks, etc.) by the number of hires made. The unit of Cost Per Hire is typically in dollar.
For example, if a company spent $50,000 on recruitment and hired 20 employees, the Cost Per Hire would be $2,500 ($50,000 / 20 = $2,500)
It’s important to track the Cost Per Hire over time, compare it against industry benchmarks and historical data, to identify areas where the recruitment process can be improved. It’s also important to track the Cost Per Hire by different segments, such as by different teams, positions, or locations, in order to identify where the problem is and take action to reduce the Cost Per Hire.
Cost Per Hire is an important metric for companies, as it allows them to evaluate the efficiency of their recruitment process and make decisions about recruitment strategies, budgets, and partnerships.
It’s also important to keep in mind that the Cost Per Hire should be aligned with the business requirements and the needs of the end-users, a low Cost Per Hire can indicate a strong recruitment process, but it can also mean that the company is not investing enough in finding the right employees or not investing in the recruitment process.
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