Employers ask this to check if you understand the financial side of recruitment, because in-house and agency recruiters in the Philippines often need to justify sourcing spend and compare channels.
Define cost per hire clearly, list its main components such as internal labor, external vendor fees, and referral bonuses, then explain the formula. Add a brief example to show you can apply it in real life.
Start by defining cost per hire as the total amount your organization spends to fill a single open position, and say plainly that it is a metric, not a fixed rule, so the number will shift with your sourcing mix. Break it into two buckets: internal costs, which include recruiter salaries, hiring manager time spent on interviews, and any referral bonuses paid to employees, and external costs, which cover job board postings, agency fees, background check charges, and even the cost of a job fair booth. Then give the formula: add all of those expenses for a period and divide by the number of hires made in that same period. For a concrete Philippine example, say that if you spent 50,000 pesos on ads and assessments, paid 20,000 in referral bonuses, and your recruiters logged 30,000 pesos of allocated time, that is 100,000 divided by, say, five hires, or 20,000 per hire. Explain why it matters: it lets you compare channels, justify budget to finance, and spot inefficiencies like over-reliance on expensive agencies. Close by noting that in a BPO context, where volume hiring is constant, tracking this monthly helps you catch spikes from attrition-driven urgent hires. Keep your tone practical and avoid listing salary figures, since that is not part of the standard formula.
Candidates sometimes say 'Cost per hire is just the salary divided by number of hires' or 'Basta kasama yung ads at job fair' without listing actual line items. Instead say, 'Cost per hire includes internal costs like recruiter time and external costs like job board fees and referral bonuses, divided by the total number of hires in a period.'
Situation
In my previous internship as a recruitment assistant at a shared services company, my supervisor asked me to compute the cost per hire for a recent campus recruitment event.
Task
I had to identify all direct and indirect expenses for that event and divide the total by the number of candidates who were hired from it.
Action
I collected the registration fee, transportation for the team, printed test materials, and the overtime pay of two recruiters who processed applications after the event. I also included the referral bonus paid to an employee who endorsed one of the hired candidates. I totaled these at PHP 102,000 and divided by the 12 hires, giving a cost per hire of PHP 8,500. Then I compared this with our online job board cost per hire of PHP 6,200.
Result
The campus event had a higher cost per hire but a better quality rating from hiring managers, so the team kept it for hard-to-fill roles and shifted some volume to online sourcing for general roles.
Cost per hire is not just about keeping expenses low, it must be weighed against the quality of candidates you get.
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