I hope i shall also share my idea on cost per hire metrics so that things would be easier.
Before calculating a cost per hire metrics, we would consider the following criteria.
1. Recruitment channel - (Vendor, employee referral or internal recruitment)
a. Vendor - what is the invoice amount paid to the vendor for a particular hire.
b. Employee referral - What is the incentive paid to the employee for the referral.
c. Internal hiring - Though we might think internal hiring is of zero cost, It would also involve few costs which are to be taken into consideration like cost of the job sites, salary paid to the recruiters.
Now cost per hire will be
Vendor cost or Employee referral or direct cost (internal hiring) / total no of hires
This can be calculated number of hires for a particular month or for a stipulated time being.
For calculating the cost of the internal recruitment, consider these things.
Number of recruiters * their salary per month + Source of resource cost per month (like job portal / referral cost etc..)
for eg three recruiters for 10,000 salary per month and one job portal used @ 120000 per year will be
10000 * 3 + (1200000 / 12 ) which will result to 40,000
This is how the cost per hire metrics can be developed so that it would be really helpful for us to understand the cost per hire. Note that this is the additional cost excluding the salary offered to the candidate.
Hope this would be helpful and shall give you a small idea of developing the metrics.
Feel free for further queries @
12th January 2009 From India, Madras
Regarding your cost per hire calculation, you should first be sure that you've included all possible recruitment costs. Depending on what you use to source this may include, advertising, online job boards, head hunter fees, employee referral incentives, etc.
The biggest issue I see with your calculation is that you've only allocated 10% of recruiters salaries to your recruitment costs. If the recruiter's sole job mission is talent acquisition, then I think it is reasonable to say 100% of their salaries should be included in your calculations. Obviously they will perform other administrative duties, as does every job, however the recruiters end product is staffing. One way to think about it is if you decided to completely outsource the recruitment function, will 100% of their salaries go away? If the answer is yes, then it is fair to allocate 100% of their overhead to recruiting costs. In some organizations a recruiter may also share other responsibilities, such as the role of an HR Generalist. If this is true for your organization then you should to allocate their time accordingly.
I hope this is helpful. Please feel free to contact me or post here with questions or follow-up discussion.
21st January 2009 From United States, Temperance
24th January 2009 From India, Mangaluru