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What’s a good benchmark for cost per hire?

What’s a Good Benchmark for Cost Per Hire?

In the world of recruitment, the cost per hire metric is a crucial measure that helps organizations assess the efficiency and effectiveness of their hiring processes. It involves calculating the total expenses incurred to attract and onboard a new employee. However, determining what constitutes a good benchmark for cost per hire can be a challenging task, as it varies depending on factors such as industry, location, and job level. In this article, we will delve into this topic, exploring different perspectives and shedding light on what can be considered a reasonable cost per hire benchmark.

The Importance of Cost Per Hire

Before diving into the benchmark, let’s first understand why cost per hire is a key metric. By evaluating the cost per hire, organizations can assess the financial impact of their recruitment efforts. It helps identify areas for optimization, spotting excessive spending, and developing strategies to streamline the hiring process.

A well-managed cost per hire also contributes to creating a positive candidate experience and employer brand. When the recruitment process is cost-effective, employers can invest more resources in attracting and nurturing talented individuals. This, in turn, enhances the organization’s reputation and its ability to attract top-tier candidates in the future.

Factors Influencing Cost Per Hire

The benchmark for cost per hire can differ significantly depending on several factors. Here are some key influencers to consider:


Different industries possess unique hiring requirements and processes, resulting in varying costs per hire. For example, industries such as healthcare and information technology often face a shortage of qualified candidates, leading to additional expenses in terms of recruitment efforts and compensation packages.


Geographical location plays a crucial role in determining cost per hire benchmarks. Hiring in urban areas or regions with a high cost of living may involve increased expenses, such as higher salaries, relocation benefits, or advertising costs.

Job Level

The complexity and seniority of a position influence the cost per hire benchmark. Hiring a top-level executive or a specialized professional might require extensive executive search firms, resulting in higher costs than recruiting entry-level employees.

What is a Reasonable Cost Per Hire Benchmark?

While determining an exact figure for a “good” cost per hire benchmark can be challenging, industry insights and statistics can provide some guidance. According to the Society for Human Resource Management (SHRM), the average cost per hire in the United States is around $4,000. However, this figure can vary significantly depending on the factors mentioned earlier. It is crucial to compare your organization’s cost per hire with similar organizations in your industry and location.

Achieving a below-average cost per hire does not necessarily equate to success, as compromising quality for cost reductions can have long-term consequences. It is essential to strike a balance between efficient spending and hiring top talent.


Q: Is there a universal benchmark for cost per hire that applies to all industries?

A: No, there is no universal benchmark for cost per hire that fits all industries. Various factors, such as industry, location, and job level, affect the cost per hire metric. It is crucial to benchmark against organizations within your industry and location for a more accurate assessment.

Q: How can organizations reduce their cost per hire?

A: Organizations can reduce their cost per hire by optimizing their recruitment processes. This includes leveraging technology, streamlining workflows, developing strong employer branding strategies, tapping into passive candidate pools, and utilizing cost-effective sourcing channels.

Q: What is the impact of a high cost per hire on an organization’s bottom line?

A: A high cost per hire directly affects an organization’s bottom line by increasing recruitment expenses. Excessive spending can strain the company’s budget and hinder its ability to invest in other crucial areas. Moreover, a high cost per hire may indicate inefficiencies in the recruitment process, potentially resulting in missed opportunities to onboard top talent.

Q: How should organizations balance cost per hire and the quality of hires?

A: Striking a balance between cost per hire and the quality of hires is essential. While reducing cost per hire is crucial for financial efficiency, compromising quality can lead to poor performance, higher turnover rates, and increased recruitment costs in the long run. Organizations should focus on optimizing recruitment strategies, leveraging technology, and fostering a positive candidate experience to attract top talent while also being mindful of cost considerations.

Q: Are there any industry-specific benchmarks available for cost per hire?

A: Yes, there are industry-specific benchmarks available for cost per hire. Various HR consultancies and research organizations provide industry-specific data that can help organizations compare their cost per hire against peers in the same sector. This information can offer valuable insights into the competitiveness of recruitment expenditure within specific industries.

Q: How can organizations measure their cost per hire accurately?

A: To measure cost per hire accurately, organizations need to include all relevant expenses involved in the recruitment process. This includes advertising costs, agency fees, HR personnel costs, relocation expenses, and any other costs directly associated with attracting and onboarding new employees. By tracking and summing up these expenses, organizations can calculate their cost per hire more effectively.

Q: Is it better to focus on reducing cost per hire or time-to-fill?

A: While both cost per hire and time-to-fill are essential metrics, the emphasis may vary depending on an organization’s priorities. However, the two metrics are interconnected. A well-optimized recruitment process often leads to a significant reduction in both cost per hire and time-to-fill. Organizations should focus on creating efficient and streamlined hiring processes while keeping an eye on controlling costs.

Q: Can outsourcing recruitment help reduce cost per hire?

A: Outsourcing recruitment can help reduce cost per hire, especially when partnering with specialized recruitment agencies or recruitment process outsourcing (RPO) companies. These experts have established networks, access to talent pools, and streamlined operations, which can contribute to cost savings and improved efficiency in the hiring process.

Q: Are there any industry leaders with benchmark cost per hire metrics?

A: Some industry leaders have set benchmarks for cost per hire that are considered noteworthy. For example, Google has reported a cost per hire below the industry average, which can be attributed to its well-structured recruitment processes and strong employer brand. However, it is crucial to note that industry leaders’ metrics may not be directly applicable to all organizations, as they possess unique circumstances and resources.

Q: How can organizations optimize their cost per hire without compromising quality?

A: Organizations can optimize their cost per hire without compromising quality by adopting efficient recruitment strategies. This includes leveraging technology for applicant tracking, using data-driven decision-making approaches, developing clear job descriptions, conducting thorough screenings, and implementing a comprehensive onboarding process. Creating a strong employer brand and offering competitive compensation packages also contribute to attracting high-quality candidates.

Q: What role does technology play in optimizing cost per hire?

A: Technology plays a significant role in optimizing cost per hire by automating various aspects of the recruitment process. Applicant tracking systems (ATS), for instance, streamline the screening and evaluation of candidates, enabling efficient use of resources. Additionally, advanced sourcing tools and platforms facilitate access to talent pools and reduce reliance on expensive third-party agencies.

Q: What is the impact of a low-cost per hire on the quality of candidates attracted?

A: A low cost per hire does not necessarily imply a compromise in the quality of candidates attracted. Organizations can achieve a low cost per hire by optimizing their recruitment processes and implementing robust employer branding strategies. By investing in efficient sourcing channels and providing a positive candidate experience, organizations can attract high-quality candidates while keeping costs down.

Q: Are there any industry-specific cost per hire benchmarks that organizations should aim for?

A: Industry-specific cost per hire benchmarks can provide useful insights and guidance. However, organizations should approach these benchmarks with caution, as there can be significant variations within industries based on factors such as location and job level. It is recommended to focus on benchmarking against similar organizations within the industry and consider their unique circumstances, resources, and goals.

Q: How often should organizations review their cost per hire benchmark?

A: Organizations should regularly review their cost per hire benchmark to ensure it stays aligned with industry standards, market conditions, and their own evolving recruitment strategies. Ideally, this benchmark should be evaluated at least annually, allowing organizations to adapt and adjust their approaches to recruitment as needed.


Understanding the benchmark for cost per hire is essential for organizations to assess the efficiency and effectiveness of their recruitment efforts. While there is no one-size-fits-all benchmark applicable across all industries, considering factors like industry, location, and job level can help organizations establish a reasonable cost per hire benchmark. Striking a balance between cost considerations and attracting top talent is crucial to achieve long-term success. By optimizing recruitment processes, leveraging technology, and fostering a positive candidate experience, organizations can enhance their cost per hire metrics while building a strong talent pipeline.

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