Cost per Hire
2022 National Average Value
$
2,700
What is the Cost per Hire?
Quite simply, Cost per Hire is the average amount spent on each hire. This includes recruiting, advertising, agencies, travel, relocation, referral bonuses, screening, and outsourcing fees. It also includes internal staffing function costs such as recruiter compensation and benefits.
What is the average value of Cost per Hire?
According to the Saratoga Workforce Index, the national average Cost per Hire in 2022 was $2700. The median Cost per Hire varies widely across industries from around $500 to $3600.
Where can I get Cost per Hire benchmarks?
The annual Saratoga HR and Workforce Benchmarking Study releases the Cost per Hire benchmark for over 20 different industries each year. The national average is released as part of the annual Saratoga Workforce Index.
How is Cost per Hire calculated?
Cost per Hire is calculated as the average amount spent on each hire. This includes the costs associated with the recruitment program and talent acquisition.
The recruiting program costs include advertising, agency costs, travel and interview costs, new hire relocation costs, employee referral bonus costs, background/screening costs, drug testing, verification, and recruitment process outsourcing fees.
The talent acquisition and staffing function costs include HR department recruiter compensation cost and benefit costs. However, this calculation excludes immigration and visa costs for candidates and costs associated with college interns.
The total of these costs is then divided by the number of hires to get the average Cost per Hire.
What does a low Cost per Hire mean?
A low Cost per Hire can indicate that the financial efficiency of your hiring process is good. It suggests that your recruiting team may be operating efficiently, managing to fill positions without incurring excessive costs. This could be due to effective advertising, efficient screening and interview processes, or successful negotiation of agency fees, among other factors. However, it's important to balance this with the quality of hires, retention rates, and performance of new hires to ensure that the recruitment process is not only cost-effective but also successful in bringing in and retaining high-quality talent.
What does a high Cost per Hire mean?
A high Cost per Hire may indicate that the financial efficiency of your hiring process may need attention. This could be due to factors such as high advertising costs, expensive agency fees, or inefficient screening and interview processes. A high Cost per Hire could also be a result of hard-to-fill jobs that have unavoidably higher associated costs. It's important to review the Cost per Hire across all functions and to analyze the costs at a detailed level to determine the potential for cost savings for the organization.
What other benchmarks are relevant to Cost per Hire?
Other relevant benchmarks include:
First Year of Service Turnover Rate
About the Saratoga Workforce Index
The Saratoga Workforce Index is an indispensable reference of national averages of 30 commonly requested HR metrics. Based on PwC Saratoga’s annual workforce benchmarking study of over 1000 metrics spanning hundreds of companies and over 20 industries, the Saratoga Workforce Index is your “quick start” guide to workforce benchmarks.
Download the guide to see the national averages for all of these:
- 90 Day Total Turnover Rate
- Average Number of Direct Reports
- Cost per Hire
- Director Headcount Ratio
- Executive Headcount Ratio
- Finance FTE Ratio
- First Year of Service Turnover Rate
- General & Administrative Function Voluntary Separation Rate
- Hire Rate
- HR FTE Ratio
- Information Technology FTE Ratio
- Labor Cost Revenue Percent
- Layers
- Learning & Development Investment per Employee
- Legal FTE Ratio
- Management Headcount Ratio
- Manager Headcount Ratio
- Offer Acceptance Rate
- One to Three Years of Service Voluntary Separation Rate
- Promotion Rate
- Racial/Ethnic Minority Headcount Percent
- Racial/Ethnic Minority Promotion Rate
- Racial/Ethnic Minority Voluntary Separation Rate
- Revenue per FTE
- Time to Accept
- Time to Start
- Turnover Rate
- Vacancy Rate
- Voluntary Separation Rate
- Women Executive Headcount Percent
- Women Headcount Percent
- Women Promotion Rate
- Women Voluntary Separation Rate
Need industry-specific benchmarks?
We provide these values as a reference point for discussions. However, given the high variance across industries, sizes and revenue, these national averages should NOT be used to make important business decisions or used in any formal reporting.
If you intend to use benchmarks for business decisions, please join Saratoga as a full member so you can have access to more specific comparison groups for each industry, revenue, size, profit/non-profit status and more. With a full membership, you’ll have access to over 1,000 metrics that are much more accurate and specific than a national average. The membership process is relatively simple, mostly automated and reasonably priced with a clear ROI.
Referencing Saratoga Workforce Index Data
If you choose to refer to these metrics in any of your materials, whether internally or externally, we ask that you include the following statement:
Excerpted from the Saratoga Workforce Index. © 2023 PricewaterhouseCoopers LLP, all rights reserved. Data is for discussion purposes only and cannot be used for investment decisions or financial evaluations.
You may include up to five metrics in any internal or external publication without any additional permissions. Contact us at saratoga@pwc.com if you want to use more than five or would like to reproduce the Saratoga Workforce Index in its entirety.
About Saratoga
Saratoga workforce and HR benchmarks provide reference points for executive-level discussions, context for people dashboards, and data to inform workforce and HR decisions. Hundreds of companies across over 20 industries trust Saratoga each year to supply over 1,000 validated workforce benchmarks around turnover, diversity, staffing, productivity, efficiency, fairness, and more.
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