Cost Per Hire: A Guide for U.S. Companies
Learn what cost per hire means, how to calculate it, and how U.S. companies can reduce recruitment costs while improving hiring speed, candidate quality, and overall hiring.
What Is Cost Per Hire? How Can U.S. Companies Reduce Hiring Costs Without Sacrificing Quality.
Hiring a new employee costs more than the salary listed on the offer letter. For U.S. employers, recruitment can involve job advertising, recruiting software, agency fees, recruiter time, hiring manager time, interviews, assessments, background checks, onboarding, and other administrative expenses.
That makes cost per hire an important recruiting metric. But there is a problem: focusing only on reducing cost per hire can encourage companies to optimize for the cheapest hire rather than the right hire. A better hiring strategy looks at cost alongside speed, candidate quality, retention, and long-term performance.
According to SHRM's 2025 benchmarking data, the average cost per hire was $5,475 for nonexecutive positions and $35,879 for executive positions among U.S. organizations surveyed.
For recruiting teams, the question isn't simply "How can we spend less?" It's "How can we spend our recruiting budget more effectively while improving hiring outcomes?"
What Is Cost Per Hire?
Cost per hire is the average amount an organization spends to recruit and hire one employee during a specific period.
The basic cost per hire formula is:
Cost Per Hire = Total Internal Recruiting Costs + Total External Recruiting Costs ÷ Number of Hires
For example, imagine a U.S. company spends $30,000 on recruiting during a quarter and makes 10 hires.
$30,000 ÷ 10 = $3,000 cost per hire
However, calculating CPH accurately requires more than adding up job board invoices. Companies should consider both direct expenses and the internal time spent moving candidates through the hiring process.
What Should Be Included in Cost Per Hire?
A complete cost-per-hire calculation should capture the major resources your organization uses to fill a position.
Internal costs can include:
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Recruiter salaries and benefits
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Hiring manager and interview panel time
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HR and administrative resources
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Candidate coordination and scheduling
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Internal recruiting technology
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Training related to recruitment
External costs can include:
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Job board and recruitment advertising fees
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Staffing and recruitment agency fees
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Background checks
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Candidate assessments
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Recruiting software
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Career fairs and hiring events
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Candidate travel or relocation expenses
One commonly overlooked expense is employee time. If recruiters and hiring managers spend hours manually reviewing resumes, conducting initial screening calls, scheduling interviews, and evaluating candidates, that time represents a real business cost, even when there isn't a separate invoice attached to it.
Why a Lower Cost Per Hire Isn't Always Better
A company could reduce its cost per hire by cutting job advertising, shortening the interview process, or eliminating screening steps. On paper, that might look like a successful recruiting strategy. But what happens if those changes also increase the number of unsuitable candidates reaching final interviews?
A low CPH doesn't automatically mean an efficient hiring process. If a new employee leaves quickly, underperforms, or turns out to be a poor fit, the company may have to restart the entire recruitment process. The original recruiting spend is only part of the cost. Lost productivity, manager time, onboarding resources, and another round of recruitment can increase the true cost of the hiring decision.
This is why recruiting leaders should evaluate cost per hire together with quality of hire, time to hire, retention, and source effectiveness. LinkedIn has similarly highlighted quality of hire as a strategically important recruiting metric rather than treating efficiency metrics in isolation.
How to Reduce Cost Per Hire Without Reducing Hiring Quality
The most sustainable way to reduce hiring costs is to remove unnecessary work from the recruitment process. Start by identifying where recruiters spend the most time. Are they manually reviewing hundreds of resumes? Calling candidates one by one? Asking the same screening questions repeatedly? Coordinating interview schedules through long email chains? Waiting for interview panels to become available?
These repetitive activities can create significant hidden costs. Automation can help recruiting teams handle high-volume activities while allowing recruiters and hiring managers to focus their time on candidates who have already demonstrated stronger potential.
This is where AI-powered recruitment and interviewing can become valuable. AI screening, structured interviews, candidate matching, and evaluation, help companies move qualified candidates through the hiring funnel faster.
AI Interviews Can Help Lower Recruitment Costs
For companies hiring at scale, the interview stage can become one of the biggest bottlenecks. Recruiters may spend hours conducting repetitive screening calls, while hiring managers and technical interviewers spend valuable time evaluating candidates who may not ultimately meet the requirements of the role. An AI interview platform can automate parts of this early-stage process.
CloudInterview enables organizations to use AI-powered video and voice interviews, role-specific questions, technical assessments, communication analysis, and evaluation reports. Candidates can be screened consistently before recruiters or subject-matter experts spend time on deeper interviews.
CloudInterview also combines AI with access to 5,000+ expert interviewers, giving companies the option to bring human expertise into the process when specialized technical evaluation is required.
The goal isn't simply to make hiring cheaper. It's to make the hiring process faster, more consistent, and more focused on qualified candidates.
Measure Cost Per Good Hire, Not Just Cost Per Hire
Cost per hire tells you what your organization spent. It doesn't tell you what you received in return. That's why recruiting teams should consider a broader concept: cost per good hire.
A good hire should ideally contribute to business objectives, perform effectively in the role, remain with the organization, and meet the expectations established during recruitment. SHRM's 2025 benchmarking report found that only 20% of organizations track quality of hire, highlighting an opportunity for recruiting teams to move beyond traditional efficiency metrics.
Instead of asking only: "How much did we spend to fill this position?"
Recruiting leaders should also ask: "Did our hiring process identify someone who can succeed in this position?"
That shift changes how organizations think about recruiting technology, assessments, interviews, and automation.
A Simple Cost-Per-Hire Strategy for U.S. Recruiting Teams
U.S. companies can start improving their recruiting economics with a simple four-step approach:
1. Calculate your current CPH.
Include internal and external recruitment expenses rather than looking only at agency or advertising costs.
2. Break CPH down by role and source.
Compare the cost of hiring software engineers, sales representatives, healthcare professionals, customer service employees, and other roles separately.
3. Identify time-consuming manual activities.
Look at resume screening, phone screening, interview scheduling, candidate communication, and evaluation.
4. Automate repetitive screening and interviewing.
Use technology to handle high-volume, repeatable tasks while keeping human decision-making where it adds the most value.
The result is a recruitment process designed around efficiency and hiring quality, rather than cost reduction alone.
The Bottom Line
Cost per hire remains an important metric for U.S. recruiting teams, particularly as organizations look for ways to control recruitment spending. But a low cost per hire isn't necessarily a sign of successful recruiting. The strongest hiring strategies balance cost, speed, candidate quality, and long-term outcomes.
By automating repetitive screening and interview activities, recruiting teams can reduce administrative workload, accelerate candidate evaluation, and give hiring managers more time to focus on the candidates who matter most.
CloudInterview helps companies move from manual, time-consuming recruitment toward an AI-powered hiring workflow, from candidate screening and AI interviews to expert evaluation and ranked shortlists.
The objective isn't simply to hire for less. It's to hire better, faster, and with greater confidence.
Ready to make high-volume hiring more efficient?
Discover how CloudInterview can help your team automate candidate screening and AI interviews while keeping humans at the center of the hiring process.
Start your free trial:
https://cloudinterview.ai/signup
Learn more:
https://www.cloudinterview.ai
Recommended Links
1. SHRM — 2025 Benchmarking Report
2. LinkedIn Talent Solutions — Recruiting Metrics
3. LinkedIn Talent Solutions — Quality of Hire
4. LinkedIn Talent Solutions — Hiring Metrics
Frequently asked questions
What is cost per hire?
The metric helps organizations understand how efficiently their recruitment budget is being used. However, CPH should be evaluated alongside other metrics such as time to hire, quality of hire, retention, and source effectiveness rather than being treated as the only measure of recruiting success.
How do you calculate cost per hire?
For a more accurate calculation, companies should include both internal and external recruitment expenses. This can include recruiter salaries, hiring manager time, job advertising, recruiting agencies, assessments, background checks, recruiting technology, and other hiring-related costs.
What is the average cost per hire in the U.S.?
SHRM's 2025 benchmarking report reported an average cost per hire of $5,475 for nonexecutive positions and $35,879 for executive positions. These figures provide useful benchmarks, but organizations should compare their own CPH against similar roles and their historical performance rather than relying exclusively on a national average.
How can companies reduce cost per hire?
Automation is another opportunity. AI-powered screening and interviewing can handle repetitive early-stage recruitment activities, allowing recruiters to spend more time on qualified candidates. CloudInterview, for example, provides AI calling, AI interviews, candidate matching, evaluation reports, and access to expert interviewers.
Can AI interviews reduce hiring costs?
The biggest benefit isn't simply eliminating a particular recruitment expense. AI can help organizations spend human time more selectively—allowing recruiters and hiring managers to focus their attention on candidates who have already passed structured screening and demonstrated relevant skills. CloudInterview combines AI calling, AI video and voice interviews, technical evaluation, candidate ranking, and human expert interviews within its hiring platform.
