Cost-Per-Hire (CPH) Calculator
Explore the true costs of recruitment with our detailed CPH calculator, which is linked with the CPHC Standard and displays both in-house and external hiring costs for a simple and transparent hiring experience.
About this calculator
The Cost-per-hire (CPH) Calculator is a simple tool for HR professionals, recruiters, and business owners to assist in determining the financial considerations of hiring new employees.
The calculation is based on the Cost-per-hire comparable (CPHC) standard that gives users a full breakdown of hiring costs, so that they can have a clear idea of the expenditures associated with welcoming new team members.
What is Cost-per-hire (CPH)?
Cost-per-hire (CPH) is a metric used in human resource (HR) operations to evaluate the financial effort needed to fill a vacant job within an organization. It shows the monetary value of the time and effort spent throughout the recruitment process.
Formulas for calculating Cost-Per-Hire (CPH)
According to the American National Standard for Human Resource Management, there are Standards to calculate the CPH. Here are the three ways that you can calculate the CPH.
Cost-per-hire (CPH) = ((∑ (External Costs) + ∑ (Internal Costs))/ Total Number of Hires in a Time Period)
1. Cost-per-Hire Internal (CPHI):
- This formula calculates the cost of hiring specifically for one organization.
- It’s tailored to the unique costs and data of that organization.
- It’s not meant to be compared with other companies’ hiring costs.
2. Cost-per-Hire Comparable (CPHC):
- This formula calculates the hiring cost, making it suitable for comparison with other organizations.
- While similar to the internal formula, it focuses on common data points that most organizations would have, making comparisons more accurate.
3. Recruiting Cost Ratio (RCR):
- This formula compares the total hiring cost to the first-year salary of the new employees.
- Instead of comparing hiring costs to the number of hires (like the first two formulas), it relates the costs to the total first-year pay of the new employees.
Formulas for calculating Cost-Per-Hire (CPH)
The Cost-per-Hire Comparable (CPHC) standard encompasses various components contributing to the overall recruitment expenses. When using the calculator, it’s essential to understand and account for these primary costs-
External Cost Data:
Advertising and Marketing Expenses: Expenses incurred as a result of advertising or marketing for specific job openings. This includes job boards, social media, marketing materials, and newspapers.
Background Checks and Eligibility to Work Expenses: Costs associated with prospective hires’ criminal, educational, credit, and reference checks. Work eligibility fees such as Form I-9 processing and E-Verify use are also included.
Campus Recruiting Expenses: Costs associated with sourcing and recruiting college and university talent, including interns and graduates.
Consulting Services: Expenses for consulting services used in the hiring process, such as EEO consulting and outside legal counsel.
Contingency Fees (Contingent to Regular): Expenses incurred as a result of payments made by an organization to a supplier or other third parties in the process of converting a contingent worker to a regular employee.
Drug Testing Expenses: Expenses related to new-hire drug tests conducted before employment begins or during the onboarding process.
Employee Referral Awards/Payments: Payments granted to employees for referring a candidate who is subsequently hired.
Immigration Expenses: Legal fees and other expenses related to clearing a new hire to be employed by the organization legally.
Job Fair/Recruiting Event Expenses: Fees and costs related to job fairs and recruiting events.
Pre-hire Health Screens: Expenses related to health screenings conducted by an employer for new hires.
Pre-screening Fees: Expenses related to testing services or assessments used to pre-screen talent.
Recruitment Process Outsourcing (RPO) Fees: Fees incurred in using RPO services.
Relocation Fees: Expenses incurred in relocating a new hire.
Sign-on Bonuses: Incentives paid to a new hire upon joining.
Sourcing Costs: Costs related to list purchases, database licenses, and memberships in organizations for networking.
Travel and Expenses (Candidate and Recruiter): Expenses incurred by candidates and recruiters during recruitment.
Technology Costs: Costs of operating technology for the recruiting/staffing process.
Third-party Agency Fees: Fees paid to external recruitment agencies.
Internal Cost Data:
Cost of Recruiting Staff: Fully loaded costs for regular and contract recruiters, including salary, benefits, and bonuses.
Cost of Sourcing Staff: Fully loaded costs for regular and contract resources, including salary, benefits, and bonuses.
Internal Overhead for Government Compliance: Incremental internal labor expenses for compliance with governmental regulations.
Non-labor Office Costs: Office expenses incurred while supporting the recruiting function.
Recruiting Learning and Development: Expenses related to training and development of the recruiting team.
Secondary Management Cost of Time for Events: Estimated cost of hiring manager time for interviews.
Secondary Management Cost of Time for Recruiting: Estimated cost of hiring manager time for recruitment activities.