Cost per hire
Everything it costs to fill a role, from advertising to the recruiter's time.
01 What it is
Why anyone looks at this number
Everything it costs to fill a role, from advertising to the recruiter's time.
It sizes the price of attrition. Multiply it by your leavers and the retention business case usually makes itself.
02 The formula
How it is worked out
Cost per hire = (external_cost + internal_cost) ÷ hires grain : year × function unit : currency per hire source : Finance cost centres joined to the applicant tracking system
Include internal time or the number is meaningless. Recruiter and hiring-manager hours are usually the largest component and the one nobody counts.
03 Worked example
The same number, with real inputs
| Total recruitment cost | €418,000 |
| Hires | 62 |
| Calculation | 418,000 ÷ 62 |
| Result | €6,740 |
With 38 voluntary leavers a year, attrition costs about €256k in recruitment alone — before the ramp-up gap, which is usually larger.
04 What moves it
Four things that actually change this number
Agency reliance
The most visible cost and often the easiest to reduce.
Employer brand
Direct applications are the cheapest source there is.
Role scarcity
Specialist skills cost more everywhere, at once.
Process speed
Long processes lose candidates and force restarts.
05 Where the number lives
The system, the record and the fields
| System of record | Key record | Fields you need |
|---|---|---|
| Finance cost centres joined to the applicant tracking system | Requisition joined to Hire | agency_fees, advertising, referral_bonus, recruiter_time, hires |
Include internal time or the number is meaningless. Recruiter and hiring-manager hours are usually the largest component and the one nobody counts.
06 How it goes wrong
Three ways this metric misleads people
External spend only
It ignores the biggest cost and makes in-house recruiting look free.
Fix: Include loaded internal time.Averaging across very different roles
A warehouse hire and a specialist engineer are not comparable.
Fix: Report by role family.Not linking to attrition
Recruitment is managed as a cost line rather than as a consequence.
Fix: Report cost per hire × leavers as the annual cost of turnover.08 Questions
Frequently asked
Should we include the ramp-up cost?
Not inside cost per hire — keep it separate but report both. Ramp-up is usually the larger number and it belongs in the retention business case.
How do we reduce it?
Referrals and direct sourcing move it most. Both are slow to build and cheap to run, which is the opposite of agency spend.
One definition, everywhere it is used
SCIKIQ stores this metric once and serves it to every dashboard, board pack and agent that asks.