The Hidden Costs of Recruitment
Most manufacturing and logistics businesses calculate the cost per hire incorrectly. This is because they only include job adverts and recruitment fees. The real cost per hire includes onboarding time, vacancy loss, productivity gaps and staff turnover.
If you’re only counting agency fees, it's only half the picture. You’re likely overspending on recruitment without realising.
Cost per hire is the amount your business spends to recruit one employee. It's calculated by adding internal and external recruitment costs together and dividing by total hires.
External costs include:
- Agency fees
- Advertising and job boards
- Assessments or background checks
Internal costs include:
- Hiring manager interview time
- Admin and onboarding support
- HR and recruiter salaries
Businesses average around £6,000 + per year per hire. Often higher in logistics because of high turnover and high-volume recruitment.
The standard formula misses operational reality.
Vacancy costs are rarely included in the productivity lost. Every unfilled role costs money. The costs include missed productivity, management pressure and overtime payments. A warehouse vacancy that’s open for six weeks can often cost more than the recruitment fee alone.
Onboarding and ramp-up costs are another blind spot. A new hire is rarely fully productive from day one. While the hire adjusts, you're paying full salary for partial output.
Attrition is also a risk. If 30% of your new hires leave within the first year, a meaningful proportion of every hire you make is being paid twice.
A realistic calculation should include:
- Internal hiring time costs
- First year attrition impact
- Direct recruitment costs
- Productivity lost
- Training and onboarding time
- Productivity ramp-up period
When calculated correctly, the real cost is often 2-3x higher than expected. This insight changes decision-making quickly.
Once you know your true cost per hire, you have a benchmark against which to evaluate every recruitment decision. It gives you a credible business case for investing in better hiring practices, a meaningful way to measure whether a new recruitment model is delivering value, and a number that resonates in boardroom conversations because it translates directly to the P&L.
Subscription-based recruitment models are a smarter approach.
You pay a fixed monthly fee for embedded recruitment support rather than a percentage of each salary, and typically deliver a cost per hire 30–50% below the industry average when the full calculation is applied. That's not a marginal saving. On a site filling 40 roles per year, it can represent six-figure efficiency.
Want to calculate your real hiring cost? We offer a free cost-per-hire audit for logistics and manufacturing employers
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