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Cost Per Hire (CPH) : Key Staffing Metrics Series

Date:

November 17, 2008

By Jonathan Lyles

This is the first article in a series that will focus on Key Staffing Metrics that you can use to measure the effectiveness of your HR practices.

The focus of this article will be on calculating Cost-Per-Hire.

It is important to note that different organizations have different ways of calculating Cost-Per-Hire (CPH) so comparing your company's Cost-Per-Hire (CPH) against other organizations should be taken with a grain of salt unless you are certain that measurement is being done in the same way among the organizations being compared.

If you are measuring Cost-Per-Hire (CPH) consistently year-over-year in time you will be able to establish benchmarks and goals for reducing your hiring costs.

The best known method for measuring Cost-Per-Hire (CPH) was developed by the Employment Management Association (EMA), a special interest group of the Society for Human Resource Management (SHRM) in conjuction with the Saratoga Institute.

The basic formula for calculating Cost-Per-Hire (CPH) is as follows:

(AD + AF + RB + TC + RE + RC +NC) / H

Legend:

CPH Cost-Per-Hire

AD Advertising fees

AF Agency fees

RB Referral bonus

TC Travel costs

RE Relocation costs

RC Fully loaded cost for internal recruiter's time with 10% being a historical figure

NC Unsolicited no-cost resumes

H Total hires

Please note that these are just a sample of costs, your company may need to add or remove costs depending on your specific situation.

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