Recruitment Cost Estimator
A tool for HR traffic and business crossover to estimate recruitment costs.
Quick Use Samples
Hiring Cost Inputs
Total Recruitment Cost
Cost Breakdown
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What is Recruitment Cost?
Recruitment cost, or cost-per-hire, is a business metric that measures the total resources invested to find and hire a new employee. It includes all direct (external) costs like advertising and agency fees, as well as the indirect (internal) costs of the time spent by staff on the hiring process. Understanding this cost is vital for effective HR budgeting and strategy.
Behind the Formula
The calculator sums all the costs associated with a recruitment process. The formula is: Total Cost = External Costs (Agency Fees + Advertising) + Internal Costs (Total Staff Hours × Average Hourly Rate) + Other Costs (Onboarding, Training). The result is the total cost-per-hire, which is often expressed as a percentage of the new employee's first-year salary.
Expert Insights
- The 'hidden' cost of internal time is often the largest component of recruitment cost, yet it's the most frequently overlooked. The time your managers and HR staff spend on screening, interviewing, and deliberating is a significant business expense.
- A high staff turnover rate can be a massive financial drain on a business. If a new hire leaves within a year, the company not only loses the initial recruitment cost but must also spend it all over again to find a replacement.
- Investing in a strong employer brand and a positive candidate experience can reduce recruitment costs over time by creating a pipeline of inbound, qualified applicants, reducing the reliance on expensive advertising and recruitment agencies.
Actionable Tips
- Use this calculator to make a business case for investing in better recruitment tools or processes. If a new system can reduce internal staff hours, it can pay for itself very quickly.
- Track your cost-per-hire over time. An increasing trend can be an early warning sign of problems in your recruitment process or employer brand.
- When deciding whether to use a recruitment agency, compare their fee (often 15-20% of the salary) to your calculated internal cost of hiring. For senior or hard-to-fill roles, an agency can often be more cost-effective.
Real-World Examples
Hiring a mid-level manager
For an $100,000 manager role, the recruitment cost can easily be over $25,000, comprising a $20,000 agency fee, $1,000 in advertising, and $4,000 of internal staff time.
Hiring a graduate with an in-house process
A company hires a graduate without an agency. The cost includes $500 for job ads, $3,000 of HR and manager time for interviews, and $1,500 for onboarding, for a total cost of $5,000.
The cost of a bad hire
A company rushes the hiring process and makes a bad hire who leaves after 6 months. They have to write off the initial $15,000 recruitment cost and then spend it again, making the total cost of that one role $30,000.
Glossary of Terms
Cost-per-Hire
A recruitment metric that measures the total cost of finding and hiring a new employee.
Time-to-Fill
A metric that measures the number of days between a job being posted and a candidate accepting an offer. A long time-to-fill increases internal costs.
Employer Brand
A company's reputation as a place to work. A strong employer brand attracts high-quality candidates and can lower recruitment costs.