Cost Per Hire (CPH)

What is Cost Per Hire?

Cost per hire (CPH) is the average amount an organization spends to fill one open position. It rolls up every recruiting expense, both internal and external, into a single per-hire figure.

Recruiting and finance teams track CPH as a core efficiency metric, usually alongside time to hire and quality of hire. Together, these numbers show whether a hiring process is fast, affordable, and effective, not just one of the three.

How Do You Calculate Cost Per Hire?

The SHRM/ANSI standard formula, set as a national benchmark in 2012, divides total recruiting spend by total hires: CPH = (Internal Recruiting Costs + External Recruiting Costs) ÷ Total Hires.

Internal costs usually include:

• Recruiter and HR team salaries allocated to hiring
• Applicant tracking and candidate tracking system subscriptions
• Hiring manager time spent screening and interviewing
• Employee referral bonuses

External costs usually include:

• Job board and sponsored posting fees
• Staffing agency or executive search fees
• Background checks and pre-employment assessments
• Relocation and travel costs for candidates

According to SHRM's 2025 Benchmarking Report, the average cost per hire for non-executive roles runs several thousand dollars, with executive hires costing many times more once search fees and multi-stage interviews are counted.

Why Does Cost Per Hire Matter?

CPH turns hiring from a vague budget line into a measurable number leadership can act on. A rising CPH can signal a slower recruiting system, weaker candidate pipelines, or over-reliance on paid job boards and agencies.

It also puts a hiring mistake in context. Gallup research finds that replacing an employee who leaves can cost half to twice their annual salary, which makes a disciplined, well-tracked hiring process far cheaper than repeated turnover.

What Drives Cost Per Hire Up or Down?

CPH varies widely based on a handful of factors:

• Role seniority: executive and specialized searches cost far more than entry-level roles
• Industry and location: regulated or credentialed fields add screening and compliance steps
• Time to fill: longer vacancies raise both direct costs and lost productivity
• Process maturity: manual, spreadsheet-driven hiring costs more per hire than a structured, tool-supported one

How Can You Reduce Cost Per Hire Without Cutting Corners?

Most reductions come from cutting waste, not cutting quality. Centralizing candidate data in an HR application tracking system removes duplicate job board spend, since recruiters can search existing candidates before posting a new ad.

Consistent ATS tracking also surfaces where a hiring process actually loses time and money, whether that is slow interview scheduling or a job board that never converts.

HR Cloud's Recruit applicant tracking system centralizes job posting, candidate screening, and interview scheduling in one platform, which helps teams lower cost per hire without adding headcount to the recruiting function.

How is Cost Per Hire Different From Time to Fill?

Cost per hire measures money spent; time to fill measures days elapsed. The two are related but not interchangeable: a company using hiring software to fill roles faster often lowers both numbers at once, since a shorter vacancy means less lost productivity and less pressure to pay for rush job ads or contingency agency fees.

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Frequently Asked Questions

Q: What is a good cost per hire?

A: There is no universal target. A good CPH is one that reflects your role mix and stays stable or improves over time, not simply the lowest possible number, since cutting spend too aggressively can hurt candidate quality.

Q: Does cost per hire include onboarding?

A: No. Standard CPH covers recruiting activity through the offer and hire, not post-hire onboarding, training, or ramp-up time, which are tracked as separate costs.

Q: Is cost per hire the same for every industry?

A: No. Regulated industries such as healthcare and finance typically run higher CPH because of credentialing checks, compliance steps, and longer interview processes.

Q: How often should a company calculate cost per hire?

A: Most organizations calculate it quarterly and annually, and break it down by department or role level to spot where hiring spend is highest.

Q: Can software lower cost per hire?

A: Yes. An applicant tracking system reduces manual recruiter hours, centralizes candidate data, and cuts down on redundant job board spend, all of which lower the internal side of the CPH formula.

Q: Does a low cost per hire always mean efficient hiring?

A: Not necessarily. A low CPH paired with high early turnover often means the process is skipping steps that would have caught a poor fit before the offer stage.