Cost per hire is one of the most quoted HR metrics and one of the most inconsistently calculated. This tool uses the SHRM/ANSI standard formula, internal costs plus external costs divided by total hires, so your number is comparable to industry benchmarks instead of a made-up estimate.
Internal costs cover your own team’s time and resources spent on hiring: recruiter and HR salaries prorated to recruiting activity, and referral bonuses paid to employees. External costs cover money spent outside your organization: job board postings, agency or recruiter fees, background verification, and candidate travel or relocation. What shouldn’t be included is general HR department overhead unrelated to hiring, like payroll processing or performance management costs, since mixing those in inflates your cost-per-hire number and makes it useless for comparison.
It varies enormously by role seniority, industry, and hiring channel. A cost-per-hire benchmark from SHRM or a similar industry body for comparable roles and geography is more useful than a single universal number; a senior technical hire filled through an agency will always cost more than an entry-level hire filled through employee referral.
No, cost per hire measures the cost of the recruiting process itself, not compensation. Salary is a separate cost that begins after the hire is made.
Estimate the portion of your recruiter or HR team’s total compensation and overhead that was actually spent on the hiring activity for this period, not their full salary if they also do other work. A common approach is time spent on hiring as a percentage of their total working hours.
Not necessarily. Specialized or senior roles legitimately cost more to fill. It’s more useful as a trend indicator, is your cost per hire rising or falling over time for similar roles, than as a single absolute judgment.
Also tracking how long employees stay after you hire them? Try our Employee Turnover Calculator.