- CPH = Total Hiring Costs/Number of Hires in a Designated Period
- Sample Hiring Costs: Advertising Costs (AC), Agency Fees (AF), Job Fair Costs (JF), Referral Bonuses (RB), Travel and Relocation Expenses (TR), Staff Costs (SC) and Miscellaneous Expenses (ME)
- Example: $18,000 (AC) + $24,000 (AF) + $5,000 (JF) + $12,000 (RB) + $114,000 (TR) + $56,000 (SC) + $16,000 (ME) = $245,000 ÷ 75 new hires = $3,267.67 per hire. You can then use this number as a baseline to evaluate any changes you make in your recruitment and selection methods.
One of the most significant benefits of any diversity program is improved organizational bottom-line in terms of reduced costs and/or increased revenues. One way to significantly impact your bottom-line is to reduce hiring costs, which you can assess by determining cost-per-hire. By definition, cost-per-hire is the average of total hiring costs divided by the number of hires in a specific time period. By determining your cost-per-hire on a regular basis (e.g., annually or semi-annually), you can evaluate the effectiveness of your recruitment and selection methods, and make adjustments that yield better financial results. Here is a simple formula you can use to determine cost-per-hire (CPH):
Dr. Tyrone A. Holmes is an author, speaker, coach and consultant. He helps his clients develop the skills needed to communicate, resolve conflict, solve problems and improve performance in diverse organizational settings.