When building your hiring process, the cost per hire can be hard to understand and usually the values become scary quite quickly. But don’t worry, we can help you out.
How do you calculate the Cost per Hire?
The Society of Human Resource Management (SHRM) collaborated with the American National Standards Institute (ANSI) to create the standard formula for calculating cost per hire (CPH) in an easy way:
What is the benchmark for CPH?
The Society of Human Resources Management (SHRM) found that the average cost per hire is over $4,000. This number came from the average across all the companies SHRM surveyed in a specific time frame.
Several factors may affect the company’s individual range. For example, cost per hire depends on hiring volume and speed. The more people you hire, and the faster you do it, the lower your cost per hire will be. This is because the fixed costs will be shared over a larger number of hires.
Specifically talking about tech, usually, the roles have a longer time to fill and the accumulated costs of a longer hiring process results in higher costs per hire in your company.
For the market, a good benchmark is a value between $3,000 and $5,000. For tech, closer to $5,000 than the average.
What should be included in Recruiting costs?
Here is a list of the common elements to have in mind when building your recruitment costs:
- Job boards fees – The ammount you pay for job boards to display your job openings.
- Candidate assessment costs – Fees for companies to test your candidates
- External recruiter expenses. – Money spent to pay individual recruiters, recruiting agencies or staffing firms.
- Employer branding efforts – Funds spent on events, recruiting days, careers fairs and community interaction
- Careers page costs – Expenses that include the setup, maintenance and redesigning of your careers page.
- Internal recruiters’ costs. Often the highest cost in recruiting, this includes salaries, bonus and benefits of the recruiters
Use your cost per hire as a benchmark for your recruiting costs. In the tech field, the average is slightly higher than usual, but don’t let it scare you. Try to keep your recruiting costs around this value to improve efficiency, having a spare budget to take advantage of opportunities and test new things.
