Recruitment cost: a complete calculation and an SMB example

Define the decision before the metric

Hiring cost can mean a vacancy budget, period cost per hire or the wider cost of replacing someone. Decide which question you need to answer: plan next quarter, compare sourcing methods or explain higher spending. One number cannot answer all three questions reliably.

The SHRM glossary describes cost per hire as a ratio covering internal and external recruitment resources. We use that methodological reference without treating its US averages as benchmarks for French SMBs.

Our period view counts people who actually started employment during the quarter. It includes recruitment spending and time incurred in that quarter, including searches without a hire. An accepted offer with a later start is tracked separately. This is an explicit reporting convention, not the only possible definition.

• SHRM · Talent Access Report (2022), glossary: cost-per-hire (opens a new tab)

Separate external spending, internal time and vacancy costs

External spending may cover advertising, agency services, paid assessments and the recruitment share of tools. Use a consistent tax basis agreed with finance. The example assumes amounts excluding recoverable VAT.

Internal time means person-hours. A one-hour interview with two managers uses two hours of staff time. Include preparation, screening, scheduling, candidate correspondence and debriefs. Agree a loaded hourly cost with finance rather than substituting take-home pay.

Track vacancy, onboarding and training costs separately. They may matter to a replacement decision, but adding them silently changes the metric. Foregone revenue is not automatically lost contribution margin.

Worked example: four hires in one quarter

A fictional SMB tracks five vacancies. Four people start during the quarter and the fifth search remains open. All costs below are incurred within that quarter. There are no agency fees or referral bonuses: that omission limits comparison with organisations that use them.

HR spends 120 hours at €35 and managers spend 60 hours at €50. Internal cost is €4,200 + €3,000 = €7,200. Advertising, tools and assessments add €2,400. Total cost is €9,600; dividing by four hires gives €2,400 per hire. External spending alone is €600 per hire.

Every price, hourly rate and volume is a teaching assumption. These are neither aiKip prices nor customer outcomes nor French market averages.

Allocate shared tools without double counting

Do not assign the whole annual subscription to every vacancy. In our example, €2,400 per year allocated to recruitment becomes €600 per quarter. That reporting allocation does not describe when the cash is paid. Maintain a separate cash schedule when needed.

For software shared with other activities, use a defensible allocation such as relevant users or recorded use, agreed with finance. Keep it stable throughout the comparison. If you allocate the €600 between four searches, the four amounts must sum to €600.

Avoid counting the same HR work twice through both a salary allocation and hourly costing. Each cost line should have evidence, an owner and an allocation rule.

• Compare the full cost of an ATS

A delayed start can raise the ratio without extra spending

If one of the four starts moves into the following quarter, the denominator becomes three. With unchanged costs, €9,600 ÷ 3 = €3,200 per hire: an €800 increase, approximately 33%, caused entirely by timing.

Period reporting supports budgeting, but can separate a search’s costs from the eventual start date. A second view can follow a cohort of vacancies from opening to closure, including all associated costs. This answers how much those completed searches cost, rather than what happened within one calendar quarter.

The chart holds total cost constant to isolate the denominator effect. It does not predict that five or six hires would require the same resources as four. Each bar is an independent scenario; there is no time series.

• Define recruitment metrics and cohorts

Test time savings without inventing ROI

Suppose better coordination releases 20 HR hours per quarter. At €35 an hour that is €700 of capacity. If implementation requires €300 of extra spending and four setup hours at €35, the first-quarter balance of valued resources is €260: 700 − 300 − 140.

This depends on verifying all three assumptions: 20 hours actually released, spending limited to €300 and setup limited to four hours. The result is neither cash savings nor a software performance promise. With unchanged salaries, released hours primarily create capacity for other work.

Measure comparable tasks before and after: scheduling, finding information or repeated data entry. Also check the quality of correspondence and any work transferred to managers. A saving in one team can become an extra burden elsewhere.

Build a repeatable monthly tracking sheet

Use one row per expense or block of time and a separate record of vacancy openings and start dates. Minimum fields are period, vacancy reference, cost category, amount or hours, allocation rule and evidence. Vacancy identifiers normally suffice; CVs and interview comments do not belong in this budgeting sheet.

At close, reconcile invoices, hours and start dates. Keep actual costs separate from future commitments. With no hires, display total incurred cost and “not calculable” for cost per hire. A zero would misleadingly suggest free recruitment.

Show open searches beside the ratio. For a small organisation, quarterly or rolling twelve-month reporting can make timing effects easier to read, provided you keep definitions stable and explain scope changes.

1. 01

   Collect

   Gather invoices, person-hours and starts for the scope.

2. 02

   Reconcile

   Check allocations and remove duplicate costs.

3. 03

   Explain

   Show total cost, hires, open searches and assumptions.

4. 04

   Decide

   Select one measurable action and a review date.

Remove friction while preserving useful assessment

Start with work that adds little evidence: repeated entry, approvals without an owner or successive interviews covering the same questions. A prepared scorecard clarifies what each conversation should contribute. Fewer steps are useful only if the decision still has the evidence it needs.

Compare channels using costs, relevant applications, timelines and sample sizes together. One hire is insufficient to establish a durable pattern. Apply consistent job-related criteria and do not automatically attribute every difference to the channel.

aiKip centralises application tracking and recruitment collaboration. This guide adds a calculation method; it does not claim that aiKip reports automatically calculate loaded hourly costs, cost accounting or ROI. Check the Reports page for the implemented scope.

• Prepare a structured interview scorecard
• Explore aiKip reports
• Compare available plans