Cost Per Hire: Measuring Recruitment Efficiency

Cost per hire (CPH) is the total cost of filling a role, divided by the number of roles filled.

CPH = (Internal costs + External costs) ÷ Number of hires

Internal costs include:

• HR and hiring manager time (hours × hourly cost)
• Interview panel time
• Internal referral bonuses
• Onboarding and training costs

External costs include:

• Recruitment agency fees (typically 10–25% of first year salary)
• Job board advertising
• Skills assessments and testing tools
• Background check services

For UK SMEs, typical CPH ranges from £1,500–5,000 for junior roles to £10,000–25,000+ for senior or technical roles (especially if using an agency).

Create a simple recruitment cost tracker by uploading a CSV with:

• Role name
• Date opened / date filled
• Time-to-fill (days)
• Salary of role filled
• All external costs (agency, job boards, assessments)
• Estimated internal time cost

AskBiz can analyse this data to show CPH by role type, department, and source channel — helping you identify your most and least efficient hiring channels.

Ask AskBiz: *'What is my average cost per hire for customer service roles vs technical roles over the last 12 months?'*

The most effective CPH reduction tactics:

1. Build an employee referral programme

Referrals typically have lower CPH (no agency fee), faster time-to-fill, and better retention. Offer a meaningful referral bonus (£500–2,000 for permanent placements) paid in two tranches (at start and at 3 months).

2. Invest in your employer brand

A strong Glassdoor profile, visible culture content on LinkedIn, and prompt, respectful candidate communication reduces agency dependency over time. Candidates approach you directly.

3. Build a talent pipeline

Before you have an urgent need, build relationships with potential hires. A candidate you spoke to 6 months ago who wasn't ready to move then may be ready now — and costs nothing to hire.

4. Use agencies selectively

Agency fees are justified for hard-to-fill roles or urgent senior hires. For volume or junior hiring, direct channels (LinkedIn, Indeed, referrals) almost always produce equivalent or better quality at a fraction of the cost.

Low CPH means nothing if the quality of hire is poor. A £500 CPH hire who leaves in 3 months and requires a rehire is far more expensive than a £3,000 CPH hire who stays 3 years and performs well.

Track quality metrics alongside CPH:

• Retention at 6 months and 12 months — what % of hires are still in role?
• Hiring manager satisfaction score — rate new hires at 90 days
• Time-to-productivity — how long before they reach expected output?

The best hiring channels are those with the best combination of low CPH and high quality retention.