How to Reduce Cost-per-Hire with Automation and Assessments
The average cost-per-hire is €4,000-€7,000. With smart automation and assessments, you can halve that. Here's how.
Door Ingmar van Maurik · Founder & CEO, Making Moves
The cost-per-hire formula
Cost-per-hire is one of the most widely used metrics in recruitment, and simultaneously one of the most misleading. The standard formula is:
Cost-per-hire = (internal costs + external costs) / number of hires
The average cost-per-hire in the Netherlands is between €4,000 and €7,000 for standard positions. For specialized or senior positions, it can rise to €15,000-€25,000. And if you engage an external recruitment agency, you're easily looking at €10,000-€20,000 per placement.
But this formula doesn't tell the full story. It misses two crucial elements:
1. The quality of the hire, a cheap hire who leaves after 6 months is ultimately far more expensive
2. Hidden internal costs, the hours of hiring managers and team members that rarely get counted
In this article, we show how to structurally reduce cost-per-hire without sacrificing quality, and how with the right investments, you can actually make better hires at lower costs.
Where does the money go?
To reduce cost-per-hire, you first need to understand where the money goes. Costs break down into two categories:
External costs
Internal costs (often underestimated)
At an internal hourly rate of €75 for a recruiter and €100 for a hiring manager, internal costs already reach €4,000-€6,000 per hire, excluding external costs.
The hidden money wasters
Additionally, there are costs almost nobody counts:
The five levers for lower cost-per-hire
Lever 1: automate screening (biggest impact)
Most recruiter time goes to screening: reading CVs, phone screening, conducting first interviews. This is repetitive, time-consuming, and inconsistent work.
With AI, you automate the heavy lifting:
Total savings: 60-80% of screening time, which translates to 15-25 hours per vacancy. At an internal hourly rate of €75, that's €1,125-€1,875 per vacancy.
Lever 2: better assessments = fewer bad hires
This is the lever most often overlooked. Every bad hire costs €50,000-€150,000. If you improve hire quality, you save multiples of the assessment investment.
Calculation example at 100 hires per year:
|----------|-------------|-----------|-------------------|
The difference between generic assessments and custom assessments is €500,000-€700,000 per year, a return that justifies any investment in your own system.
Lever 3: increase job page conversion
An average job page has a conversion rate of 8-12% (visitors who actually apply). With an optimized job page, you can increase that to 30-50%.
What does this mean for cost-per-hire?
Lever 4: reduce dependency on recruitment agencies
Recruitment agencies are the most expensive way to hire. At a fee of 20% on a €60,000 salary, you pay €12,000 per placement. If 30% of your hires go through agencies (at 100 hires = 30 placements), that's €360,000 per year.
With your own hiring system, you can drastically reduce that dependency:
A reduction of agency dependency from 30% to 10% saves: 20 placements x €12,000 = €240,000 per year.
Lever 5: own system vs. SaaS stack
The average recruitment department uses a fragmented stack:
|------|-------------|
That's €14,400-€45,600 per year on separate tools that don't work together optimally. With your own integrated system:
The full picture: halving cost-per-hire
Let's add everything up for a company making 100 hires per year:
|-------|--------------|
Even with conservative calculations, you can reduce cost-per-hire from €5,000-€7,000 to €2,000-€3,000, a halving that directly translates to the bottom line.
Implementation path: where to start?
You don't have to do everything at once. The most effective path:
Phase 1: Quick wins (month 1-2)
Phase 2: AI screening (month 2-4)
Phase 3: Own system (month 4-6)
Key takeaways
Reducing cost-per-hire isn't about cutting quality. It's about smarter investing in your recruitment process:
The companies that most effectively reduce their cost-per-hire aren't the ones cutting corners. They're the ones investing in a system that pays for itself.
Want to know what savings opportunities exist for your organization? Schedule a conversation and we'll calculate it for you.