What external and internal costs should be included in a cost-per-hire calculation?

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The cost-per-hire (CPH) metric measures the costs associated with sourcing, recruiting and staffing open position in an organization. External costs are commonly defined as expenses paid to external vendors or individuals during recruiting; while internal costs are expenses related to the internal staff, capital and organizational costs of the recruitment/staffing function. Examples of these costs include:

External Costs

Advertising and marketing expenses

Background checks and eligibility to work expenses

Campus recruiting expenses

Consulting services

Contingency fees: contingent to regular

Drug-testing expenses

Employee referral awards/ payments

Immigration expenses

Job fair/recruiting event expenses

Pre-hire health screens

Pre-screening fees

Recruitment process outsourcing (RPO) fees

Relocation fees

Sign-on bonuses

Sourcing costs

Travel and expenses, candidate

Travel and expenses, recruiter

Technology costs

Third-party agency fees

 

Internal Costs

Cost of recruiting staff

Cost of sourcing staff

Internal overhead for government compliance

Non-labor office costs

Recruiting learning and development

Secondary management cost of time for events

Secondary management cost of time for recruiting

 

Depending upon the type of CPH metric being calculated (either for an internal reflection of a single organization's costs or to compare the CPH data across various organizations), employers may only use some of the above costs, or use other data not listed above that is meaningful to the organization. 



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