What is CPH ( Cost Per Hire )?

In today’s competitive job market, finding and retaining top talent has become a critical priority for businesses. Recruitment costs can quickly add up, making it essential for companies to have a clear understanding of their recruitment costs to ensure that they are making efficient use of their resources. One such metric that is often used to determine the effectiveness of a company’s recruitment process is the cost per hire (CPH). CPH is a calculation that measures the total cost incurred by a company to fill a job opening. This metric includes both internal and external recruitment costs, such as advertising fees, recruitment agency fees, referral bonuses, travel expenses, and HR personnel’s time and effort involved in the hiring process.

Calculating CPH involves adding up all the costs associated with hiring a candidate and dividing that number by the total number of hires. For example, if a company spends $50,000 on recruitment costs and hires ten employees, the CPH would be $5,000 per hire.

Knowing the CPH can help a company to evaluate the cost-effectiveness of its recruitment process. Companies can compare their CPH to industry benchmarks to determine how their recruitment costs stack up against their peers. A high CPH can indicate that a company is spending too much on recruitment, which could negatively impact its profitability.

Reducing the CPH can also help a company to increase its profitability. One way to achieve this is to streamline the recruitment process, such as automating tasks and using technology to reduce the amount of time and effort required to find, screen, and interview candidates. A company could also consider using referral programs or social media to attract potential candidates, reducing the need for expensive recruitment agencies.

Another way to reduce the CPH is to improve the quality of the recruitment process by increasing the number of qualified candidates. A company can achieve this by refining job descriptions to attract the right talent, using pre-screening techniques to filter out unqualified candidates, and improving the interview process to ensure that only the most qualified candidates move forward in the hiring process.

While reducing the CPH can be a critical goal for companies, it is essential to remember that recruitment costs should not be the only consideration. It is equally important to find and retain the best talent to drive business success, and sometimes that may require additional investment in recruitment efforts.

In conclusion, understanding the cost per hire is a crucial metric for any company looking to streamline their recruitment process and reduce costs. By evaluating and optimizing their recruitment process, businesses can improve their bottom line while attracting and retaining the best talent to drive their success.