Reduce Cost-per-Hire
Cost-per-Hire (CPH) is a critical metric that evaluates the efficiency of your recruitment process, and it’s calculated using the formula:
(Total Internal Costs) + (Total External Costs)
(Total Number of Hires)
Internal Costs (generally not dependent on hire/role volume)
- Recruiter salaries
- Employer Branding Campaigns (ongoing)
- General purpose tools (e.g., video chat platforms)
- SaaS subscriptions (eg. sourcing platforms like Rolebot - annual/M2M)
- Labor allocation for time spent interviewing & opportunity cost (time spent away)
- ATS
External Costs (often dependent on hire/role volume)
- Job advertisements (job boards)
- Referral bonuses
- Recruitment agency fees (standard 20%-30%)
- Background checks and assessment tests / code reviews
- Employee relocation & Travel expense (if applicable)
- RPO services (if applicable)
Actions we can take to Reduce our Cost-per-Hire
1. Shorten Time-to-Fill (and its benefits)
- Faster hiring cuts screening and engagement expenses while enabling more hires within the same timeframe (reduces interview costs)
- A quicker process allows recruiters to handle multiple roles, reducing the CPH.
- Shortening hiring cycles reduces the need for costly external sourcing.
- Filling roles quickly prevents disruptions in business operations and team productivity.
- Provide a Better Candidate Experience - streamlined processes reduce drop-offs and avoid repeated recruitment efforts, saving time and money.
2. Balance Resources and Technology
- Optimize team size and ensure your technology stack enhances productivity. Overloading recruiters without proper tools can increase inefficiency and costs.
3. Eliminate Inefficiencies
- Remove redundant processes or tools that don't lead to successful hires.
- Standardize workflows for similar roles.
- Keep interview panels consistent across similar roles to save time and effort.
- Configure and optimize your ATS, sourcing tools, and other recruitment technologies to improve workflows and reduce manual effort, which may include defining KPIs for your users to achieve optimal outcomes.
5. Consider Remote Hires
- Remote roles reduce relocation and interview-related expenses.
- Expand hiring to less competitive geographies outside major tech hubs like SF, NYC, LA, or DFW & Austin to access high-quality talent at lower costs.
6. Minimize or Replace Staffing Agency Usage to Avoid High Placement Fees
- Utilizing technologies like Rolebot to achieve the same outcome at a 95%+ lower cost per placement.
Industry CPH Benchmarks - according to SHRM and other employment sources:
- Median CPH in 2024: ranged from $4,700 to $5,000, with a broad range of $500 to $30,000 depending on the role type (from intern to C-Suite).
- Roles in major tech hubs (eg. SF, LA, NYC, DFW & Austin) carried a 38% premium.
- Tech roles cost 17% more to fill compared to non-tech roles.
- Senior positions commanded a 50% premium over junior roles.
Median CPH by job category - ranked highest to lowest as follows:
- Engineering
- Product/Design
- Sales/Business Development
- Marketing
- Ops
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