Cost Per Hire
By TNTSEO United
Last updated: September 2026
Cost per hire is total recruiting costs, internal and external, divided by the number of hires in the same period; SHRM reported in April 2022 that the average cost per hire was nearly $4,700. For a warehouse manager, the useful calculation starts with your own recruiting records.
Formula: (external recruiting costs + internal recruiting costs) / hires in the same period. An invoice-only tally misses the time your recruiter and supervisors spend finding and selecting people. Keep post-hire orientation and training in a separate startup budget. The example below shows how to build that distinction into a repeatable calculation. At FIS Recruitment, we support employers with candidate screening and a dedicated account manager and recruiter.
The cost per hire formula
Add external recruiting expenses to the cost of internal recruiting work, then divide by hires in the same reporting period. Choose the site, role and date window before gathering costs. That gives the person checking your worksheet a clear definition of what the result measures.
Cost per hire = total recruiting costs / number of hires. ANSI lists the historical ANSI/SHRM 06001-2012 Cost Per Hire standard. Its internal measure provides the framework used here.
For your worksheet, write down when a hire counts. The example uses employees who started work. Keep invoices, time estimates and hiring records together, and use the same approach next period. Do not switch between accepted offers and actual starts without explaining the change.
What goes into it
Count the money and staff effort used to recruit and select employees. Include applicable costs even when they sit outside the recruiting department's budget. Use this checklist to ask accounting and hiring managers for records, then document how you allocate shared expenses to the role being measured.
| Cost | External or internal | Examples |
|---|---|---|
| Advertising and job boards | External | Paid listings and recruitment advertising |
| Agency or search fees | External | Recruiting and placement fees |
| Background checks and screening | External | Vendor checks and hiring-related drug tests |
| Assessments | External | Purchased candidate testing |
| Travel and relocation | External | Interview travel and relocation expenses |
| Recruiter time | Internal | Sourcing, calls and scheduling |
| Hiring-manager and interviewer time | Internal | Interviews and selection work |
| Recruiting systems | External software expense | Allocated recruiting software costs |
Source: ANSI/SHRM Cost-per-Hire Standard, 2012, cost tables.
Under that standard, post-hire orientation, training, and the new employee's wages and benefits are outside cost per hire. Track startup costs separately. Hiring-related checks remain recruiting expenses; distinguish them from general orientation.
What the benchmarks say, and what they do not
Cost per hire is total recruiting costs, internal and external, divided by the number of hires in the same period; SHRM reported in April 2022 that the average cost per hire was nearly $4,700. Treat that published figure as context when reviewing your own hiring budget.
SHRM's public article, published April 11, 2022, reports the average. It does not identify a warehouse-specific result. A broad reference figure cannot tell you what your site should spend given its location, hiring volume and process. Compare your own periods using consistent categories before deciding whether an apparent improvement reflects a better process or simply fewer expenses counted.
A worked example for an hourly warehouse role
This illustrative example is not a benchmark and not a quote. It shows how an employer could organize recruiting expenses for the same hourly warehouse role at a single site. Every input is hypothetical, and the separate training budget stays outside the recruiting total and division.
For this illustration, assume one completed month with 10 employees starting work. Assume fully loaded employer costs of $40 per recruiter hour and $50 per manager or interviewer hour, including pay and benefits. These are teaching assumptions, not market wages or FIS rates.
| Recruiting cost | Assumed input | Illustrative amount |
|---|---|---|
| Advertising and job boards, external | Monthly spend | $1,000 |
| Agency or search fees, external | No agency used | $0 |
| Background checks and screening, external | Period total | $500 |
| Assessments, external | Period total | $200 |
| Travel and relocation, external | None incurred | $0 |
| Recruiting systems, external | Software allocation | $300 |
| Recruiter time, internal | 40 hours x $40 | $1,600 |
| Manager and interviewer time, internal | 20 hours x $50 | $1,000 |
| Total recruiting costs | $2,000 external + $2,600 internal | $4,600 |
| Cost per hire | $4,600 / 10 hires | $460 |
| Separate orientation and first-week training | Startup cost, not part of cost per hire | $2,000 assumed budget, excluded |
Source: original illustrative assumptions prepared for this article, September 2026; arithmetic calculated from the displayed inputs. No observed cost data or vendor quote is represented.
In this illustrative example, not a benchmark or quote, the calculation is $4,600 divided by 10 hires, yielding $460 per hire. The assumed training budget is excluded.
Replace each assumption with your invoices and documented staff time for the chosen period. Replace the hire count with your actual starts, and record any allocation method so someone else can reproduce the result.
The cost you do not see: the unfilled shift
An unfilled shift can create operating costs beyond the recruiting bill. Consider overtime used to cover the gap, shipments that could be missed and supervisor time spent rearranging coverage. Review those effects alongside cost per hire, while keeping them out of the recruiting numerator itself.
Ask the shift manager what changed while the position was open. Separate time spent interviewing from time spent covering work. That distinction helps avoid counting the same supervisor hour twice and gives you a more useful account of the staffing decision.
How to bring cost per hire down
Start by identifying recruiting work you could avoid repeating, then test changes against your own results. Review referral sourcing, the clarity of the job post and the time between interviews and decisions. For seasonal peaks, compare direct recruiting with agency support using the same staffing need.
- Ask for referrals: Track any referral award as a recruiting expense.
- Describe the job clearly: Include pay, shift, location and actual duties so candidates can assess the fit.
- Shorten the decision loop: Assign a decision owner and reserve interview time before advertising.
- Contact good former seasonal workers: Check interest and availability before launching another search.
- Price the peak: Ask an agency to scope the role, schedule and expected assignment length.
Review what a staffing bill rate covers. Convert an hourly quote into a cost for the planned hours, then compare it with direct employment costs, recruiting expense and uncovered work. An hourly rate and a one-time cost per hire need that common basis.
At FIS Recruitment, we phone screen and interview candidates, check references, and assign a dedicated account manager and recruiter. Explore warehouse staffing in the Lehigh Valley or how temp to hire works as you decide which arrangement fits the work.
Time to fill, the number that travels with it
For this worksheet, time to fill means calendar days from requisition approval to the candidate accepting the offer. Keep that endpoint consistent and record the start date separately. Cost per hire tells you about recruiting expense; time to fill helps you examine how long the decision process took.
SHRM's HR glossary defines the interval from requisition to acceptance. Review delays between approval, screening, interview and offer rather than relying only on the final average. Also check the gap between acceptance and starting work when planning shift coverage.
Frequently asked questions
Use cost per hire to examine recruiting expense, then consider vacancy effects and startup needs alongside it. The answers below keep those boundaries consistent so you can compare your worksheet with an agency proposal, a previous hiring period or a budget without mixing different types of costs.
How do you calculate cost per hire?
Divide internal and external recruiting costs by the number of hires in the same period. Begin with a defined site, role and date window, then collect invoices and estimates of recruiting staff time. Document when a hire counts and how you allocate shared expenses. Keep those choices consistent across reporting periods so a change in your method does not look like a change in performance.
What is the average cost per hire?
SHRM reported in April 2022 that the average cost per hire was nearly $4,700. That public figure is a dated reference, not a warehouse hiring target or a current quote. Build your budget from your own records and staffing requirements. When comparing results, ask whether the other calculation covers similar work and counts the same expenses before using it to judge your recruiting process.
What costs are included in cost per hire?
Cost per hire includes internal and external recruiting expenses, such as advertising, screening, agency fees and staff selection time. Under the ANSI/SHRM standard, post-hire orientation, training, wages and benefits are excluded. Give those startup and employment costs their own budget lines. When reviewing an invoice that combines services, ask for enough detail to distinguish recruiting work from services delivered after the employee has been hired.
What is the difference between cost per hire and cost of a vacancy?
Cost per hire measures recruiting expense, while vacancy costs concern the effects of leaving work uncovered. In a warehouse, examine overtime coverage, delayed shipments and supervisor time redirected to the gap. Keep those effects separate from the hiring calculation and avoid counting the same expense twice. Review both when deciding whether to continue a search, change the process or arrange temporary coverage for the shift.
How can I reduce my cost per hire?
Look for repeat recruiting work you can remove, then measure whether the change helps. Try clearer pay and shift information, employee referrals, a simpler decision process and outreach to reliable former seasonal employees. Track the spending and staff time associated with each approach. Assess the people hired and whether the shift is covered as well as the expense, rather than making a lower recruiting total your only objective.
Is it cheaper to hire through a staffing agency?
It depends on hiring volume, speed and the work you need covered. Compare an agency's all-in bill rate for the planned hours with direct employment costs plus your full cost per hire and the effects of an unfilled shift. Confirm what the proposal includes and what your team still handles. Do not compare an hourly bill rate directly with a one-time recruiting total; put both options on the same basis.
Tell FIS Recruitment which role and shift you need covered. Call 800.248.8687, email info@fisrecruitment.com, or open a requisition.
