What a hire actually costs

The CFO asks recruiting what a hire costs. Recruiting knows the hires and almost none of the cost: agency fees and board spend live in payables, bonuses and recruiter time in payroll. No one system holds both halves.

RuleAssemble cost per hire from all three systems: hires from recruiting, agency and board fees from payables, bonuses and recruiter cost from payroll.

Neverreport only the blended number. It hides that an agency hire can cost ten times a referral, which is the decision the number exists to inform.

Three systems, one number. Recruiting holds the hires; finance and payroll hold the costs; only a model you own holds both.

◆ Why recruiting cannot answer itthe hires are here; the costs are elsewhere.

The CFO asks recruiting a fair question: what does a hire cost? Recruiting knows the hires, and almost none of the cost. Agency fees and job-board spend sit in payables as invoices. Referral bonuses and loaded recruiter time sit in payroll. The number the question wants is a join across three systems, and no single one of them holds both halves.

So cost per hire becomes a quarterly spreadsheet, rebuilt by hand, argued over, and stale the week it is finished. The source page promised this number when the invoices join from finance; this is where they join.

◆ The buildup, workedevery cost, its source system, one total, one per-hire.

Cost category	From	Quarter
Agency fees	Payables	96,000.00
Job board and advertising	Payables	24,000.00
Referral bonuses	Payroll	18,000.00
Recruiter loaded cost	Payroll	62,000.00
Total recruiting cost, over 16 hires	Cost per hire 12,500.00	200,000.00

The four costs sum to 200,000.00, over the same 16 hires the funnel and the headcount page report, so blended cost per hire is 12,500.00. Every line names the system it came from, which is the point: the number is only assemblable in a model that holds all three. Sample values are illustrative, never client data.

◆ By source, where the blended number hides the truthagency hires cost ten referrals.

Source	Hires	Direct cost	Per hire
Agency	3	96,000.00	32,000.00
Job board	5	24,000.00	4,800.00
Referral	6	18,000.00	3,000.00
Internal	2	0.00	0.00
Direct total, plus 62,000.00 shared recruiter cost	16	138,000.00

Blended, every hire costs 12,500.00. By source, an agency hire costs 32,000.00 and a referral costs 3,000.00, before anyone weighs quality or retention. That spread, invisible in the blended number, is the actual decision: where the next dollar of spend goes. The shared recruiter cost stays a named line rather than being spread, the same honesty the labor cost report gives unassigned money.

-- cost per hire by source: recruiting hires joined to finance and payroll cost
SELECT s.source_name,
       COUNT(DISTINCT h.worker_key)                  AS hires,
       SUM(c.direct_cost)                            AS direct_cost,
       SUM(c.direct_cost) / COUNT(DISTINCT h.worker_key) AS per_hire
FROM fct_hire h
JOIN dim_source s     ON h.source_key = s.source_key
LEFT JOIN fct_recruiting_cost c ON c.source_key = s.source_key AND c.period = h.period
GROUP BY 1 ORDER BY 4 DESC

Use case

Problem

Cost per hire is a quarterly spreadsheet because the hires live in recruiting while the costs are scattered across payables and payroll.

What we build

An owned model joining recruiting hires to finance and payroll cost on source and period, producing cost per hire total and by source.

What you get

The blended number and the by-source spread together, so spend decisions rank sources on real cost instead of on the funnel alone.

What does an agency hire cost you, versus a referral?

We join the three systems and answer, total and by source, in your cloud.

Talk to us

Terms on this page

CFO: Chief financial officer, the finance leader who owns the cost question.
cost per hire: Total recruiting cost divided by hires, blended or by source.
AP: Accounts payable, where agency and job-board invoices are recorded.
agency fee: The placement fee a staffing agency invoices for a hire.
referral bonus: The payment to an employee whose referral is hired, paid through payroll.
loaded cost: A worker cost including employer taxes and benefits, here the recruiters.
direct cost: Cost attributable to one source, versus shared overhead.
blended: Total cost over all hires, averaging the sources together.
source: Where a hire came from: agency, job board, referral, internal.