How to Calculate the Average Cost of Hiring a New Employee
The hiring game has become a minefield in recent years. As businesses try to survive and grow in an ever-evolving working world, recruiting strategies are hampered by skills shortages, budget constraints and change management in the wake of new technologies. Companies hiring rely on lots of different channels and third-parties to support their recruitment and talent acquisition. That makes calculating the average cost of hiring a new employee very difficult.
However, it’s important to know your cost per hire. You want to make sure that you're not haemorrhaging money on recruiting processes that are inefficient, ineffective and don’t futureproof your workforce. Learn how to calculate the average cost of hiring a new employee in this blog.
Do you know your average cost per hire for new employees?
This is an honest question but one that most businesses can’t answer with much accuracy or confidence. Do you know your average cost per hire (CPH)?
Did you know that 8 in 10 companies don't know the costs of hiring employees?
That’s a pretty damning statistic but it’s not surprising to us. At pepelwerk, we know that many employers are suffering from outdated systems and methods of recruitment no longer appropriate for this era. But employers are under pressure to source skilled staff to meet the needs of their customers, especially on-demand, seasonal and specialist talent. It’s easy to see why hiring costs can escalate and become hard to quantify.
Key factors involved in calculating hiring costs
The main issue with defining hiring costs is the number of different factors involved. Here are the key factors you need to consider:
- Internal talent acquisition costs (number of recruiters, people involved in the hiring process and pre-hire screening tools)
- External recruiting costs (staffing agencies, headhunters, private employer organizations and third-party vendors)
- Hiring marketing costs (job events/career fairs, job boards like Indeed, ZipRecruiter and LinkedIn, and pay-per-click speciality recruitment sites)
- HR system costs (applicant tracking systems, document management systems and other software solutions for managing the hiring process)
Yes, you need to take all these costs into account! You can see now why quantifying your average cost of hiring a new employee is tricky.
Calculating your average cost of hiring a new employee
To help employers to calculate their average cost of hiring a new employee, we developed a Cost-per-Hire Calculator. This tool lets businesses see how much they're spending on existing recruiting solutions and resources. It also acts as a hiring cost comparison tool, which shows you how much money you could save with more cost- and time-efficient hiring solutions.
We designed our Cost-per-Hire Calculator for Companies Hiring to help you work out the costs of your entire recruiting program.
Are you an owner of a business, CFO, HR Manager or Talent Acquisition Manager? If so, this hiring costs calculator tool will be of great value and a real eye-opener!
Summary: Try out our Cost-per-Hire Calculator
Do you want to quantify your hiring costs? The best business decisions are backed up by numbers. It’s a great advantage for companies to know the average cost of hiring a new employee. Our Cost-per-Hire Calculator helps you to define the costs of your hiring process and demonstrates the cost-savings you can expect with a modern hiring solution like pepelwerk.
Learn the true cost of your talent acquisition and hiring process with pepelwerk’s Cost-per-Hire Calculator and cost comparison tool. Start hiring smarter with pepelwerk!
pepelwerk is your ideal hiring solution for the digital era, which includes a self-service Hiring Hub and Talent marketplace, Resource Planning and Vendor Management. Our contextual skills-matching software matches Companies Hiring with the Talent they need today for the jobs of tomorrow. You can review and manage your job candidate matches with ease, and enjoy applicant tracking, skills assessments and video tools.