You calculate the cost per hire by adding up all internal and external recruitment costs for a given period and dividing this total by the number of employees hired during that same period. The formula is simple; the real answer lies in the hidden costs that most employers fail to take into account. These include the time spent by your hiring managers, lost revenue due to a vacant post, and staff turnover in the first few months.
Many SMEs in the engineering, manufacturing, logistics and maritime sectors underestimate the true cost of a new employee. They focus on the recruitment agency’s invoice or the cost of advertising, and overlook the rest. As a result, one recruitment route may seem cheap, whilst in fact it costs you the most money on an annual basis.
How exactly do you calculate cost per hire?
Cost per hire = (total internal costs + total external costs) / number of employees recruited. This is the same basic formula used by the trade association SHRM as an international standard (SHRM, 2024). Internal costs are your own hours and systems; external costs are everything you pay for externally.
External costs are the easiest to identify: job boards, advertising budgets on Meta or LinkedIn, agency fees and assessments. Internal costs are more difficult to identify, as they are hidden away in the diaries of people who aren’t paid to recruit.
What are the minimum items that should be included in the calculation?
- Advertising and media budget by channel
- Costs of job boards and recruitment platforms
- Agency or secondment fees
- Hours worked by the recruiter, hiring manager and interviewers
- Assessments, reference checks and travel expenses
- Onboarding costs in the first few weeks
What hidden costs do you often overlook?
The biggest hidden costs are your own team’s hours, the revenue you lose whilst the vacancy remains open, and the turnover caused by candidates who leave again soon after joining. For hard-to-find roles, these three costs often exceed your entire advertising budget, yet they do not appear on any invoice.
Would you like to find out more about data-driven recruitment?
- Recruitment using AI and data
- Takes an average of 3–8 weeks to complete
If you factor these costs in, the whole picture changes. A cheap job advert that remains open for three months is more expensive than a targeted campaign that delivers the right people within a few weeks. Speed, therefore, is not a luxury, but a cost that pays for itself.
1. The hours worked by your hiring managers and interviewers
Every intake, every interview and every debrief takes up the time of staff who are paid by the hour. If you work on the basis of an average hourly rate of 40 to 60 euros, ten interviews plus preparation can quickly add up to hundreds of euros per vacancy. Those hours are rarely included in a recruitment budget, but they are certainly paid for.
2. Costs associated with a vacant post
An unfilled technical or logistical vacancy costs you money every week: lost production, colleagues having to work overtime, or orders you are unable to accept. Many technical roles are classified by the UWV as being difficult to fill (UWV, 2024), which means vacancies remain open for longer and costs mount up. Factor in these weeks of lost productivity and you’ll see why time-to-hire is so crucial.
3. Staff turnover and skills mismatch in the first few months
If a candidate leaves within three months, you’ll have to start the process all over again and pay double the recruitment costs. A mismatch is therefore one of the most expensive factors in your cost per hire. A rigorous pre-selection process and clear job requirements immediately reduce this risk. Find out how we approach this via our data-driven approach.
What is a realistic maths example?
The table below shows how visible and hidden costs together make up the true cost per hire. This is an example based on a single technical vacancy, so you can see which items you would normally overlook.
| Cost item | Type | Example amount |
|---|---|---|
| Advertising budget for the campaign | Visible | € 1.200 |
| Job boards and platforms | Visible | € 400 |
| Hours worked by the hiring manager and interviewers | Hidden | € 900 |
| Vacancy (loss weeks) | Hidden | € 2.500 |
| Onboarding during the first few weeks | Hidden | € 600 |
| Total cost per hire | € 5.600 |
The visible costs here are €1,600, but the true cost per hire is €5,600. Anyone who looks only at the invoice underestimates the actual expenditure by almost three-quarters. It is precisely this hidden layer that determines whether your recruitment approach is cost-effective.
How does cost per hire compare with secondment and recruitment and selection?
Temporary staffing and traditional recruitment agencies may seem predictable, but they often charge a fee per hire or an ongoing hourly rate. Data-driven recruitment marketing employs a structured approach that actually reduces your hidden costs, as vacancies are filled more quickly and the pool of candidates is of a higher calibre.
At FosFor, vacancies are filled within 3 to 8 weeks on average, with a pre-selection process that means, as a client, you only interview the 2 to 4 best candidates each month. This reduces precisely those costs you wouldn’t normally factor in: fewer weeks of downtime and far fewer hours spent by your own team.
| Aspect | Secondment | W&S agency | Recruitment marketing (FosFor) |
|---|---|---|---|
| Cost model | Ongoing hourly rate | Fee per hire | Structural approach |
| Candidate’s property | Hired | In service | In service |
| Impact on hidden costs | Keep walking | Partly lower | Significantly lower |
| Speed | Quick, but temporary | Variable | 3 to 8 weeks |
Which approach is most cost-effective depends on how often you recruit and how rare your profile is. For recurring demand in engineering, logistics or the maritime sector, a structured approach usually comes out on top in terms of total cost per hire. Feel free to take a look measurable recruitment results by sector, to get a sense of what is feasible.
How can you reduce your cost per hire on a long-term basis?
You can reduce your cost per hire by shortening your time-to-hire, tightening up your pre-selection process and choosing your recruitment channels based on target audience data rather than habit. Every week you save on an open vacancy is a direct saving. And every mismatch you prevent saves you a second round of recruitment.
- Measure your current cost per hire in full, including hidden costs.
- Choose your channel based on where your target audience is actually active.
- Streamline your process: fewer rounds of discussions, faster feedback.
- Refine your job requirements so that you only interview suitable candidates.
- Adjust campaign figures on a weekly basis, not based on gut feeling.
Employers often discover, through target audience data, that candidates prioritise very different factors than expected. These insights help you tailor your campaigns more effectively and reduce your cost per hire. Would you like to apply this to specific roles? Then take a look at our current vacancies for top performers as an example of how we position profiles.
At FosFor, we combine data from hundreds of recruitment campaigns with public labour market data, so that you can make decisions based on figures rather than assumptions. Figures on the tight labour market confirm this need: the number of unfilled vacancies remains at a historically high level (CBS, 2024).
Frequently asked questions about calculating cost per hire
What is the average cost per hire in the Netherlands?
In the Netherlands, the average cost per hire is roughly between €3,000 and €6,000, depending on the job level and the scarcity of candidates. For technical and maritime roles that are difficult to fill, this figure is higher, mainly due to lengthy recruitment processes and hidden costs such as lost weeks and internal hours.
Which costs do employers most often overlook?
Employers most often overlook the hours spent by their own hiring managers, the lost revenue from a vacant post, and staff turnover in the first few months. These hidden costs do not appear on any invoice, but when dealing with hard-to-find candidates, they often amount to more than the entire advertising budget.
Is recruitment marketing cheaper than secondment?
For recurring recruitment needs, recruitment marketing is usually more cost-effective than temporary staffing, as you take candidates on as permanent staff rather than hiring them on an ongoing basis. Temporary staffing remains useful for temporary peaks in workload, but the costs continue to accrue for as long as you need the extra staff.
How quickly do you recoup the savings from a shorter time-to-hire?
A shorter time-to-hire pays for itself almost immediately through fewer weeks of lost productivity. Every week that a technical or logistics vacancy remains unfilled costs you in terms of lost production, overtime or missed orders. Filling vacancies within 3 to 8 weeks can therefore quickly save you thousands of euros per role.
Would you like to know what your actual cost per hire is and how you can reduce it? Book a no-obligation strategy meeting and we’ll work through it together to identify where the hidden costs lie for you.