How to calculate your cost per hire


The average employee costs £12,000 to replace

(Accounts & Legal, 2019)

In this article we’ll cover how to avoid costly replacements by hiring the right person in the first place; and how to calculate your cost per hire when the need arises.

What is Cost Per Hire and why does it matter?

Cost Per Hire (CPH) is the grand total of all resources spent on recruiting a single employee for your organisation. Where relevant, this can also take into account external recruiting costs such as background checks, job boards and recruitment agencies.

Calculating Cost Per Hire

If you are using an Applicant Tracking System (ATS) to manage your recruitment, then most should include a standard report that lets you calculate the Cost Per Hire figure for all completed jobs.

The Jobtrain ATS includes a standard Cost Per Hire report to calculate the cost of applicants' vs the cost of the successful hire. This report totals all costs associated with the role including any advertising costs and/or the use of recruitment agencies.

To calculate this figure manually, every cost element would need to be collated and added together to make a grand total. For example, if a total of £20,000 was spent on recruiting for a role where 20 people applied, the cost per applicant would be £1,000. The cost per successful hire would be the total cost of the spend on the role, i.e. £20,000.

Cost Per Hire - elements to consider


The cost of advertising a job can vary significantly. Most ATS platforms will include free advertising options, such as free posting to Indeed, but if Indeed and other job boards are an additional cost to the company then it is something that should be included.

Recruitment agencies

There could be a reliance and potentially a hefty price tag on the regular use of recruitment agencies in hiring. Make sure these costs are included in your total cost per hire. Managing your own recruitment in-house with applicant tracking software can lead to huge savings. Jobtrain client, Sweco, saved £78k on agency fees in the first six months of implementing our ATS.

What can we do to get the hire right first time around and avoid costly replacements?
CPH is calculated for every job we recruit for – but we want to avoid any additional expenditure, such as re-hiring for a role where the original placement was not a good fit.

There are a variety of techniques to ensure new hires are attracted to and well matched to your organisation. Having the best recruitment technology in place is a good place to start.

Candidate attraction

Would potential candidates know what it’s like to work at your organisation? Let them decide if it’s somewhere they can see themselves working before they commit to apply.

A careers website is a great way to achieve this. Include workplace video stories such as a day in the life of your most recruited for roles, interviews with employees – the possibilities are endless.

This same video content, along with imagery, is priceless content that can be used in job adverts too. Paint the picture beyond just words for applicants so they really understand the role they’re about to apply for.

Quality of assessments and screening

Consider the way candidates are screened at the application stage. Bespoke killer questions at application stage ensure only the best matched candidates get through; then with Scored Assessment questions integrated into the application too, it will help to determine a greater understanding of the candidate’s 'fit' for the role, without the need for lengthy application forms.

Extending your welcome message beyond offer acceptance
37% of people admitted they changed their minds and did not start a new role despite accepting the initial job offer. There might be a variety of reasons for this but maintaining engagement and interest with successful hires (before their start date) plays a key part.

A Welcome Hub for new hires helps close this potentially “silent” period for candidates. It provides a personalised area for new hires to access all sorts of information that you decide to showcase – include video welcome messages from the team, information on what they can expect on their first day. The world’s your oyster!

Next steps
Is your Cost Per Hire much higher than it should or could be? Considering managing recruitment in-house can pay huge dividends!

Download our guide on calculating the return on investment of an Applicant Tracking System below to find out more.


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