Cost per Hire: A Vital Human Resources KPI

Overview of Cost per Hire

Cost per Hire is a key Key Performance Indicator (KPI) in the Human Resources (HR) category. This critical metric is used to measure the average expense an organization incurs to recruit and hire a new staff member. It includes costs related to advertising, recruitment agency fees, employee referrals, travel expenses for applicants and staff, relocation expenses, and onboarding expenses, amongst others.

Understanding the Cost per Hire metric is essential for an organization to appropriately budget for recruitment and maintain cost-efficiency in the hiring process.

Calculating Cost per Hire

The calculation for Cost per Hire is straightforward, encompassing all costs associated with the recruitment process and dividing it by the total number of hires within a certain time period. Here is how it's calculated:

Cost per Hire = Total Recruitment Costs / Total Number of Hires

In this formula, 'Total Recruitment Costs' include all expenditures related to the recruitment process, and 'Total Number of Hires' represents the total number of new staff hired within the specified period.

Conclusion

Keeping track of the Cost per Hire KPI is an essential practice for any HR department. It provides insight into the cost-effectiveness of an organization's recruitment strategies. It can also highlight areas where savings can be made, helping the organization to maintain a balance between finding the right talent and controlling hiring costs.