Cost per hire
Cost per hire is the total internal and external cost of recruiting divided by the number of hires in a defined period. Consistent cost categories and counting rules make the result useful for comparison.
Define the calculation before collecting costs
The ANSI/SHRM Cost-per-Hire Standard, approved in 2012, combines internal and external recruiting costs and divides them by the hires in the period. It provides a measurement method, not a European small-business benchmark.
Specify the period, included hiring activity and point at which you count a hire. Then use those rules consistently. Mixing offer acceptances in one quarter with start dates in the next changes the denominator.
(€6,000 external costs + €4,000 internal costs) ÷ 5 hires
€2,000 per hire
The external-only figure in this example would be €1,200 per hire. The difference comes from including staff time and other internal recruiting costs.
These figures are fictional and are not an industry benchmark.
Include each cost once
Advertising, agency fees, assessments and interview travel can contribute to external expenditure. Internal costs include the staff and resources used to recruit. Choose an allocation method for a shared subscription or a person who spends only part of their working time on hiring, and keep a record of it.
Do not count the same invoice in both categories. Salary paid for the new employee’s work after joining and the cost of leaving a role vacant answer different questions from the cost of recruiting that person.
Compare the work behind the average
A specialist search can move a small team’s average substantially. Show the hire count alongside the result and investigate the cost categories before drawing a conclusion about efficiency.
Lower expenditure alone does not show whether a hire succeeded. Read cost per hire alongside first-year retention and evidence of quality of hire. A cheaper process that fails to fill the role has not necessarily saved the business money.