The recruitment process is difficult and very time-consuming for most industries especially when it’s a big firm. In such a scenario closing per profile with a good candidate becomes difficult and sometimes pressurises the recruiting team. Although Teams use various job portals and techniques to close as many as profiles possible unfortunately face variants of difficulties. In this context, we will discuss another important term of recruitment in this article today which is CPH.

Let’s discuss first what is CPH.

Cost per hire (CPH) is a crucial metric for evaluating the efficiency of your recruitment process. It represents the total investment your company makes to fill an open position. By understanding and optimising your cost per hire, you can streamline your hiring process, manage budgets more effectively, and make data-driven decisions to improve your talent acquisition strategy.

Why Does Cost Per Hire Matter?

For any big or small industry Cost per hire matters. Cost per hire provides insights into the financial health of your recruitment efforts. A high cost per hire might indicate inefficiencies, such as excessive spending on job advertisements, recruitment vendors, prolonged hiring cycles, or ineffective sourcing methods. Conversely, a lower cost per hire suggests that your recruitment process is cost-efficient. By regularly tracking this metric, companies can:

  • Improve budget allocation: Identify where recruitment funds are spent and optimise investments. So that hiring for the company becomes easy instead of time-consuming and pressuring the team for no purpose.

  • Enhance efficiency: Enhancing efficiency is another important concept in such a context companies can Pinpoint bottlenecks or ineffective channels in the hiring process.

  • Measure ROI: Sourcing strategy is such an important concept that it requires the company to track it regularly and Evaluate the return on investment of different sourcing strategies.

The Cost Per Hire Formula The formula for cost per hire is straightforward:

Cost Per Hire = (Internal Recruiting Costs + External Recruiting Costs) / Total Number of Hires

  • Internal costs include recruiter salaries, technology tools, and administrative expenses.

  • External costs involve job board fees, recruitment agency fees, advertising, and travel expenses.

Cost Per Hire Statistics in 2024 According to recent industry reports, the average cost per hire in 2024 is approximately $4,700 for most industries. However, this can vary widely:

- Entry-level positions: $2,000–$3,000

- Mid-level roles: $4,000–$7,000

- Senior/executive positions: $10,000+

Tracking cost per hire allows organizations to stay competitive and ensure their recruitment strategies align with their financial goals. By balancing cost with quality, companies can build robust teams without overspending.