Cost per Hire

Cost per Hire (CPH) is a key performance indicator used in human resources and finance to determine the average cost of bringing a new employee into the company. It encompasses all expenses related to attracting, sourcing, interviewing, and onboarding a new hire. These costs are a significant component of a company's operating expenses (OPEX) and are closely monitored to ensure recruiting efforts are cost-effective.

Calculating CPH provides valuable insights for workforce planning and financial forecasting. A high or rising CPH may indicate inefficiencies in the recruitment process, such as over-reliance on expensive recruiting agencies or ineffective job advertising. Conversely, a low CPH can suggest a highly efficient talent acquisition function, though it should be analyzed alongside quality-of-hire metrics to ensure cost savings are not compromising talent quality.

Organizations use this metric for strategic budgeting, allowing them to allocate resources effectively across different departments and hiring initiatives. By understanding the true cost to fill various roles, finance and HR teams can collaborate on more accurate headcount plans and justify investments in recruitment technology or employer branding initiatives that can lower CPH over time.