Cost per hire is one of the most common recruiting metrics, and one of the easiest to misread. This guide explains how to calculate cost per hire, what drives it up in biotech and pharma, and how to reduce cost per hire without lowering the quality of your hires.
How to Calculate Cost per Hire
A widely used formula comes from the American National Standard on cost per hire (ANSI/SHRM 06001.2012), and ISO/TS 30407:2017 describes the same approach. In plain terms:
Cost per hire = (total external recruiting costs + total internal recruiting costs) ÷ total number of hires in the same period
The standard counts the costs of sourcing, recruiting and staffing. It leaves out costs that come after the hire, such as salary, training and time to productivity.
What Counts as External and Internal Costs
External Costs
Money paid to outside parties for recruiting.
- Agency and search firm fees
- Job advertising
- Events and job fairs
- Recruiting travel
Internal Costs
Your own recruiting resources.
- Recruiter and recruiting team compensation
- Recruiting technology, such as your ATS
- Other fixed recruiting costs your team carries
- Hiring manager and panel time, if you choose to track it
Decide once which costs you include, write it down and keep it the same. That makes one period comparable with the next.
What Drives Cost per Hire in Biotech and Pharma
- Small talent pools for specialized scientific and medical roles
- Candidates who are not looking and must be approached directly
- Long interview processes with large panels
- Roles whose requirements change during the search
- Searches that restart after a late-stage candidate declines
- Relocation for roles tied to a lab or a hub
Many of these drivers are also what slows hiring down. Our guide on reducing time to hire covers them from the time side.
The Cost of a Bad Hire
Cost per hire only measures the cost of filling a role. It does not measure the cost of filling it with the wrong person. A poor fit in a small biotech team can delay a program, take up leaders’ time and lead to a second search.
For that reason, the cheapest search is not always the least expensive one. Track quality-of-hire measures, such as retention and hiring manager satisfaction, next to cost per hire.
How to Reduce Cost per Hire
- Agree on the role profile before the search starts
- Name one decision owner and set feedback deadlines
- Keep interview panels focused
- Build talent pipelines for roles you hire often
- Automate routine admin, such as scheduling and status updates
- Use outside search where it adds the most, such as senior or rare roles
Read our guide to recruitment process automation for more on the admin side.
How Biomind Talent Can Help
Biomind Talent recruits for pharma and biotech teams in research and development and medical affairs, and our talent acquisition consulting helps teams build an efficient hiring process, including ATS implementation. See our biotech recruiters page to learn more.
Cost per Hire FAQ
How do you calculate cost per hire?
Add your total external recruiting costs and total internal recruiting costs for a period, then divide by the number of hires in the same period. This follows the ANSI/SHRM cost-per-hire standard.
What is included in cost per hire?
External costs such as agency fees, advertising and recruiting travel, and internal costs such as recruiting team compensation and recruiting technology. Post-hire costs such as salary and training are not included.
Is a low cost per hire always good?
Not always. A low cost per hire can hide the cost of a poor hire. Track quality of hire alongside it.
How can a biotech company reduce cost per hire?
Clarify the role profile early, speed up feedback, build pipelines for repeat roles and automate routine admin.
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