Calculating the Cost Per Hire

To estimate the cost per hire, many variables can be taken into scope. The data below
provides a comprehensive (but definitely not exhaustive) overview of external and
internal cost factors. The external and internal cost factors are defined by ISO (the
International Organization for Standardization) as part of ISO norm 30407. The data is
copied with permission.

Table 1 - Cost per Hire external cost data

External cost factor Specification

Expenses related to the advertisement of roles, including LinkedIn

Advertising and marketing expenses advertisement, search engine advertisement (SEA), costs for job boards such
as Indeed and Independer, PR, and physical marketing material

Background checks and eligibility to work Expenses related to criminal, education, background, eligibility to work, and
expenses reference checks

Consulting services Expenses related to third party consultancies and legal services

Expenses related to the payment of agencies to hire (their) contingent workers

Contingency fees: contingent to regular
as regular employees

Medical or health testing expenses

Expenses related to pre-employment medical and health testing related
incurred
directly to the hiring process
by the organization in hiring

Employee referral awards/payments Expenses related to employee referral programs

Immigration expenses Legal and agency expenses required for arranging work permits and/or visas

All expenses related to job fairs and other recruitment expenses, including
Job fair/recruiting event expenses costs of attendance, transport, on-site booth and other materials, and travel
expenses

Expenses related to screening assessments, including assessment

Pre-screening fees
(subscription) fees and assessment agency fees

Recruitment process outsourcing (RPO)

Sum of fees related to recruitment process outsourcing (if used)
fees

Any fees for relocation, including travel costs, (temporary) housing, or one-off
Relocation fees
packages

Expenses related to sourcing of candidates such as sourcing agency costs and

Sourcing costs
headhunting fees

Expenses related to travel for candidates, or that are reimbursed by the

Travel and expenses, candidate
candidate to the organization
 Expenses related to travel by the recruiter, or that are reimbursed by the
Travel and expenses, recruiter
recruiter in their line of work

Cost of supporting technology infrastructure related to talent acquisition, such

as applicant tracking system, job advertisement aggregation systems,
Technology costs
candidate relationship management systems, recruiting website hosting, and
reporting systems

Third-party agency fees Any other fees paid to external agencies

Table 2 - Cost per Hire internal cost data

Internal cost factor Specification

Full loaded costs, including base salaries, benefits, bonus/performance-based

Cost of recruiting staff
pay, and other labor costs for all employed and contracted recruiting staff

Full loaded costs, including base salaries, benefits, bonus/performance-based

Cost of sourcing staff
pay, and other labor costs for all employed and contracted sourcing staff

Internal overhead for government Incremental internal labor expenses involved in creating, submitting,
compliance monitoring and processing materials to comply with governmental regulations

Office expenses, including a representative portion of rent, capital

expenses and incidentals, incurred while supporting the recruiting
Non-labor office costs
function. It is acceptable to take a percentage of overall office costs based on
recruiting headcount

Expenses related to expanding the capabilities of a recruiting team

Recruiting learning and development
through formal and informal learning opportunities

Many organizations pay employees after a specific tenure of the new

employee. For the compiler of the Cost Per Hire metric, it may cause concern
that the actual expenses are not incurred in the same time period for which
Cost Per Hire is being measured. The compiler of the Cost Per Hire statistic is
free either to use the actual monies paid to employees in the time period or,
Referral fees alternatively, to treat the anticipated expense as an accrual. In that event, if
there are, for example, 10 hired candidates via employee referral, at €X per
hire, the compiler would record employee referral expenses as 10 × €X,
regardless of whether payment was made to the employee in that time
period. The compiler of the metric should note what technique was used in
the Cost Per Hire statistic

Secondary management cost of time for Multiply number of hours by an appropriate internal rate to determine
events estimated total cost of employee time spend on recruiting events

Secondary management cost of time for Multiply number of interviews by an appropriate internal rate to
recruiting determine estimated total cost of hiring manager time