As a recruiter, you are always looking for better ways to do your job. You are looking for ways to lower your hiring costs and improve your hiring success rate. You are looking for new ways to save time, avoid repetitive tasks, and manage your team better.
The Cost Per Hire Calculator is an Excel template that evaluates the financial impact of hiring a new employee. You can determine the average cost per hire by dividing the total cost of hiring by the number of hires. This metric is a great indicator of hiring success. It highlights areas where you may want to improve.
In this blog, we are going to learn about the cost per hire calculator. Then we will learn how to use the cost per hire template to improve hiring in your organization.
What is a cost-per-hire calculator?
A cost-per-hire calculator is a tool that calculates the cost of hiring someone. It analyses all the potential costs and benefits. We use it to calculate the total cost of hiring a new employee. For example, it can calculate how much it will cost to hire a new salesperson based on salary and commission. Or how much it will save by firing an employee who is costing the company more than they are worth. It helps them decide whether it is worth it to hire someone or not.
The costs of hiring an employee are dependent on the type of position and the geographical location. For example, if you are in Silicon Valley, you will be paying more for a tech job than if you were in New York City.
A cost per hire calculator helps companies figure out how much they would spend on salary and benefits for a new hire. Depending on the company’s needs, it may be worth paying more for a certain type of person.
How do you calculate cost per hire?
A cost per hire calculator is an excel spreadsheet that calculates the cost of hiring employees. Employers use this calculator to see how much it costs them for every new hire. Many factors contribute to the cost per hire. This includes the type of position and the location. It calculates the costs of recruitment, training, and other expenses such as salary, benefits, etc.
The formula to measure cost per hire is:
Cost per hire = Total Cost of Hire / Number of Hires
There are three basic steps to measure cost per hire:
- Calculate the total cost of hiring a new employee. This is done by adding up all costs that you incur while hiring this individual. This includes recruitment fees, training fees, salary, and any other expenses.
- Divide the total cost by the number of hires made to get an average cost per hire.
- Calculate your company’s profit margin percentage by dividing your net profit by your total revenue. Then multiply it by 100%. The result will be your company’s profit margin percentage.
Here is a cost per hire template that you can use for free –
Factors to consider while using the Cost Per Hire Calculator
There are three factors one should consider while calculating cost per hire –
Internal Costs: The cost to run an internal talent acquisition team acquisition.
- Salaries (Employer taxes should be included)
- Pension, health insurance, and other benefits.
- Laptops, phones, internet, and other types of equipment.
- Training staff cost, software, subscriptions, and IT support.
- Office costs
External Costs: The cost spent on talent acquisition with other companies.
- Fess of the recruitment agency
- External contractors and outsourcing of recruitment process
- Advertising on Job boards, Instagram, LinkedIn, etc.
- Aptitude tests, assessment centers, medical tests, etc.
- Background checks
- Sourcing software, applicant tracking system, and other recruitment software.
- Cost of moving new staff, visas, legal fees, and other relocation expenses
Number of Hires: The total number of hires that joined the company last month. Companies include all internal and external hires for:
- A candidate went through a hiring process led by a hiring manager
- A candidate was promoted to a full-time position from a temporary position
- A candidate having fixed contracts for more than a year on the company’s payroll
These calculations exclude:
- Contractors, consultants, and other external workers.
- Internal transfers
- New employees from mergers or acquisitions
- Employees who are on a third party’s payroll
Managers use the cost per hire template to track the employees’ performance throughout the year. They use excel formulas to calculate hours worked and wages paid to employees.
What are the Best Ways to Use the Cost Per Hire Calculator Excel?
There are many different ways to use a cost per hire calculator. The most important thing is to be sure that you are using the right calculator for your needs. There are many different types of calculators out there. Be sure to choose the one that is best suited for your business.
Once you have the right calculator, you can input the relevant data to determine your cost per hire. This data can include the salary of the position, the cost of advertising, the cost of recruitment, and more. By inputting this data, you can get a more accurate picture of your hiring costs.
Once you know your cost per hire, you can start to look for ways to reduce it. This may include negotiating with recruiters, improving your hiring process, or looking for cheaper advertising options. By reducing your cost per hire, you can save your business money in the long run.
The most important thing is to ensure that you input the correct information. This includes the job title, salary, and other factors. Once you have this information, you can then use the calculator to determine the cost per hire. This is a valuable tool that can help you budget for your hiring needs.
The average cost per hire by industry
Many factors can impact the recruitment cost per hire for a given industry. The first is the size of the company. Larger companies have more resources available to dedicate to the hiring process. As a result, their cost per hire tends to be lower.
The second is the location of the company. Companies in urban areas often have to pay more for labor, and as a result, their cost per hire is usually higher.
The type of industry can also impact the cost per hire. Industries that require highly skilled workers tend to have a higher cost per hire than those that require less skilled workers.
The cost of hiring new employees average can vary by industry. In some industries, the cost per hire may be low, while in others it can be quite high. Below are some hiring costs statistics for different industries –
- IT industry – $4,129
- Retail industry – $2,693
- Healthcare industry – $3,331
- The manufacturing industry – $2,976.
Why is cost per hire important?
By knowing the cost per hire, businesses can make sure that they are not spending too much on hiring. Hence, they can adjust their budget. The cost per hire can help businesses compare the cost of different hiring methods and see which ones are most effective. It allows organizations to track and compare the costs of different recruitment methods. It helps organizations optimize their recruiting efforts.
The cost per hire is one of the most important factors to consider when making hiring decisions. It includes both direct and indirect costs. The direct costs are things like advertising, recruiting fees, and training. The indirect costs are the opportunity cost of not hiring. It also calculates the cost of lost productivity while the new employee gets up to speed.
Is The Cost Per Hire Calculator Right for You?
You may be wondering if a cost-per-hire calculator is the right tool for you. There are a few things to consider when making this decision.
- Cost per hire calculators determines how much a potential employee will cost you.
- It helps you compare the cost of different candidates. This helps in deciding who to hire.
- It can help you save time. You can input the information you need into the calculator, and it will do the work.
- Some companies prefer to use a cost-per-hire calculator. It offers them an accurate picture of what they’re spending on their employees.
This tool is a quick and easy way to calculate the cost of hiring a new employee. The cost per hire calculator helps you determine the cost of recruiting, selecting, and onboarding a new employee. Enter the number of hires you need to make. The calculator will provide an estimate. Keep in mind that this is only an estimate, and your actual costs may vary. You’ll need to use your best judgment to determine the right way for your specific situation.
The cost per hire calculator is designed to help companies determine the true expense of hiring an employee. It is an essential part of a company’s hiring strategy. It is used to determine the financial impact of hiring new employees and to understand whether they will be profitable. The cost per hire calculator allows companies to compare their current hiring costs to those in earlier years.Our website, X0PA AI has a cost per hire calculator excel that you can use for free! We have products that will help you to streamline your hiring process. If you’re interested in learning more about our recruiting software, you can visit the X0PA AI product page on our website.