Internal costs include recruiter and hiring manager time, recruitment technology and referral bonuses; external costs include job board fees, agency fees, advertising, assessments and background checks. If a team spends £150,000 in a year and makes 300 hires, cost per hire is £500. Published standards set out formulas so organisations can compare like with like, though many teams use a simpler internal version.
Cost per hire helps with budgeting and shows which channels and processes are expensive, but it can mislead when viewed alone. A cheap hire who leaves within weeks costs more than a pricier one who stays. Tracking it alongside quality of hire, time to fill and retention gives a fuller picture, and reducing manual screening time is often one of the larger savings at volume.