Formula
Cost per Hire = (Total Recruitment Costs ÷ Number of Hires)
Calculation Example
If a company spends $50,000 on recruitment and hires 10 employees, Cost per Hire = $50,000 ÷ 10 = $5,000
Data Source
HR records, payroll reports, financial statements
Tracking Frequency
Quarterly, Annually
Optimal Value
Lower is better, but must be balanced with hire quality.
Minimum Acceptable Value
A very low cost may indicate poor recruitment efforts.
Benchmark
Industry benchmarks: Tech ~ $4,000-7,000, Retail ~ $1,000-3,000, Healthcare ~ $3,000-6,000
Recommended Chart Type
Bar chart (to compare recruitment channels), Line chart (to track trends)
How It Appears in Reports
Displayed in HR and finance reports to evaluate hiring efficiency.
Why Is This KPI Important?
Indicates recruitment cost-effectiveness.
Typical Problems and Limitations
Does not account for employee retention; a low cost but high turnover is inefficient.
Actions for Poor Results
Improve sourcing strategies, invest in employee referrals, use data-driven recruitment.
Related KPIs
Time to Hire, Employee Turnover Rate, Training Effectiveness Score
Real-Life Examples
A company reduced cost per hire by 30% by optimizing internal referrals instead of paid job ads.
Most Common Mistakes
Focusing on reducing cost per hire while sacrificing candidate quality.
