HR Matrix: Cost Per Hire

Calculating the Cost of Hiring

Employers often use Cost of Hiring to measure the effectiveness and efficiency of recruiting, selection, and training activities. It essentially takes into account all direct and indirect costs associated with the process of hiring an employee. It is often used to measure the costs associated with employee turnover, which is, filling a vacancy that is a result of an employee resignation or termination.

The calculator available for in this section will assist you to capture all relevant costs that should be considered when determining how much hiring an employee or turnover actually costs your organization.

In many sections of the calculator, the costs you will be asked to provide are based on the salary and benefits costs of the employee performing the task, for example, in the Selection section, you are asked to provide the cost of “Interviewing”. This cost should be determined by identifying the number of hours spent interviewing candidates, including preparation time and time spent writing up interview notes, by all company employees involved in the interview process. Each person’s hours should be multiplied by their hourly cost (salary and benefits) and added together to determine the total cost of Interviewing.