Cost Per Hire: What Are The Average Costs Of Recruiting?

Cost Per Hire: What Are The Average Costs Of Recruiting?

The average cost of recruiting, also known as cost-per-hire, is a KPI (key performance indicator) from recruiting. The KPI is calculated from the total amount invested in recruiting and divided by the number of hires made. Example: If you as a company spent €45,000 on hiring in a fiscal year and recruited 12 new employees in the process, then the average cost of recruiting in your company is €3,750.

What Are The Average Costs Of Recruiting Comprised Of?

The average cost of recruiting consists of an internal and an external component. The internal cost items include:

• Recruiters’ salaries: their work is more or less almost exclusively dedicated to recruiting. In small companies, an employee may devote only part of his or her working time to recruiting.
• The cost of interviews: This refers to the internal working time expended by the employees involved in the recruitment process. In addition to the recruiters, managers also sit in on the interview or guide the applicant through the company. Internal debriefing of interviews must also be considered here.
• In many companies, bonuses are offered to employees when new colleagues are hired as a result of their recommendation or referral.

External costs of recruitment include:

• Advertising expenses: this includes placing ads in job boards or print media. It also includes participation in job fairs with travel expenses and booth fees.
• Recruitment software: Recruitment processes are usually managed using software and IT. Licenses and fees are incurred for this.
• Headhunters: Especially for specialists and executives, non-internal recruiters are often hired and must be compensated for their services.
• Applicant travel expenses: Employers are required to reimburse applicants for travel expenses.
• Relocation costs of the new employee: If the employee is hired, the company will contribute to the relocation costs of the new colleague.

What Are The Average Costs Of Recruiting?

There are different indications of how high the costs of recruitment are. Usual indications are in the range between € 3,000 and € 4,000.

How Meaningful Are the Average Costs of Recruitment?

When assessing the average cost of recruiting, it is important to bear in mind that job profiles vary greatly depending on the industry and structure of the company. For example, a manufacturing company recruits a very large number of employees in the production area, many of whom are unskilled unskilled workers. For these, recruitment costs are much lower than for specialized engineers in a science startup, for example. To recruit top talent today, costs need to be budgeted much higher than the usual average cost of recruiting.

Just as an example: If you hire a headhunter to find a highly skilled engineer for you, it alone will cost you two or three months’ salary for the new hire. Assuming you hire the new colleague for €72,000, two months’ salary already means €12,000 headhunter commission. Then there are your internal expenses.

These costs are additionally influenced by the labor market situation, i.e. by the experience, scarcity and readiness of the existing talent pool. Unfavorable circumstances can significantly prolong the talent search and thus also drive up costs.

Are There Ways To Reduce The Average Cost Of Recruiting?

AI-based recruiting software can simplify and accelerate some processes. This also lowers the average costs of recruiting. Slected.me‘s recruiting software offers a revolutionary approach to acquiring top talent. You don’t rely on some talent out there finding your job ad more or less by chance, but actively go searching yourself. From a huge pool of potential professionals, you can quickly and easily find matches that fit your vacancy. And you can do it in minutes. This alone eliminates the advertising costs and time spent on the tedious process of screening out unsuitable applicants. The costs of a conventional recruitment process for highly qualified specialists and managers can be reduced by up to 90%.

Actively Address The High Average Cost Of Recruitment

You are welcome to contact us for a consultation to learn more about the benefits of Slected.me’s AI-based recruiting software. Slected.me also offers you the possibility of a trial subscription to test the software extensively.