S. Amir Kohan

Cost of Hire/Cost per Hire

Cost of Hire

This measurement uses external costs and internal costs to determine the overall
cost per person hired during any given time period. This formula looks at the number
of hires and the costs to obtain them. It enables us to derive expenses for each new hire
stated as an average.

Cost per Hire = (S (External Costs) + S (Internal Costs))
(Total Number of Hires in a Time Period)

External costs are those expenses such as external agency fees, advertising costs, job fair
costs, travel costs, and other similar expenses for the time period being analyzed. Internal
costs are expenses that can include fully loaded salary and benefits of the recruiting team
and fixed costs such as physical infrastructure.

Cost per Hire = ((External Costs = $100,000) + (Internal Costs = $100,000))
(Total Number of Hires in Time Period = 50)
Cost per Hire = $4,000

Cost per Hire Internal/Comparable Determining the internal cost per hire uses the
same formula but includes only internal costs in the formula numerator. It is possible to
compute an external cost per hire and compare the two results.


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