Cost Per Hire Benchmarks for HR Leaders

Most HR leaders can recite their headcount and their open requisitions from memory, but ask them what each hire actually costs and the answer turns vague. That gap is expensive. Cost per hire is the metric that tells you whether your talent-acquisition function is efficient or quietly bleeding budget, and the organizations that track it well make sharper decisions about where to spend, when to use an agency, and which roles to pipeline. Getting the number right, and acting on it, is one of the most direct ways a people-operations team demonstrates value to the rest of the business.

What Cost Per Hire Actually Includes

The standard formula, defined jointly by SHRM and ANSI, is simple: total recruiting costs divided by the number of hires in a given period. The trap is in the word total. External costs are the visible ones: job board postings, agency and contingent fees, background checks, assessment platforms, and referral bonuses. These show up on an invoice, so they are easy to count.

The internal costs are where most teams understate the number. Every hour a recruiter spends sourcing, every hour a hiring manager spends screening resumes and interviewing, every panel debrief, and the overhead of your applicant tracking system all belong in the calculation. When you add internal hours back in, the real cost per hire is often double the invoice-only figure. According to SHRM, the blended US average lands around $4,700, but that average hides enormous variation. A high-volume hourly role might cost under $2,000, while a specialized professional or executive search routinely runs past $10,000 once internal time is counted.

What Drives the Number Up

Three forces dominate. The first is agency reliance. Contingent recruiters typically charge 15 to 25 percent of first-year salary, so a single agency-filled $90,000 role can add $18,000 to your recruiting spend on its own. The second is a long time to fill, which burns recruiter hours, keeps the agency engaged longer, and leaves the seat empty while the work piles up. The third is a low offer acceptance rate: every declined offer means restarting sourcing, effectively paying twice to fill the same req.

Underneath those sit quieter drivers. Poorly written job descriptions shrink your qualified applicant pool, which forces more spend per requisition to find the same number of viable candidates. Weak employer branding has the same effect upstream. And a hire who does not work out resets the entire clock, which is why cost per hire and the cost of a bad hire are so tightly linked. Cutting cost per hire is rarely about one lever; it is about removing friction across the whole funnel.

How to Bring It Down Without Cutting Quality

The highest-leverage move is building a referral program. Referred candidates are cheaper to source and, according to widely cited recruiting research, tend to stay longer than candidates from job boards, so you save on both the front and back end. The second is developing a talent pipeline and employer brand so you are not paying premium agency fees on every search; a warm bench of past applicants and silver-medalist candidates is the cheapest sourcing channel you have.

Improving offer acceptance rate is underrated. Faster, more competitive offers reduce the repeat-sourcing tax, and benchmarking your compensation, including the full picture of total rewards covered in our guide to onboarding ROI, keeps strong candidates from walking. None of this means chasing the lowest possible number. A cost per hire driven down by skipping assessments or rushing decisions produces poor-quality hires who leave inside a year, which is far more expensive than the spend you saved. Read the metric alongside quality of hire and 90-day retention, and you will optimize for efficiency that actually sticks.

Making the Number Useful

A blended company-wide average is interesting but not actionable. Segment cost per hire by department and seniority, report it quarterly to leadership alongside time to fill and offer acceptance rate, and you turn a vanity number into a management tool. That segmentation is also what lets you justify a recruiting-budget request: when you can show that one function costs three times another to staff because of agency reliance, the case for investing in an internal pipeline writes itself. For the operating-cost context that surrounds every hire, from workspace to equipment, our breakdown of the true cost of remote versus office work is a useful companion, and the HR lead generation tools for HR and recruiting pillar shows how to surface these numbers for prospects.