If it were only that easy to decide! As nice as it would be to pull
down a book like this and find the magic answer to this complicated
question, the real solution lies in your company’s particular hiring
history. First, you need to determine both the cost-per-hire and the
‘‘source cost.’’ Then you can determine which recruiting method is
the most cost-effective for your company and your industry.

The Employment Management Association (EMA) also gives us some guidelines. Its Cost-per-Hire and Staffing Metrics Survey has been conducted annually since 1983 and gives the best insights into the most cost-effective recruitment practices.

Before we explore some of the figures shared in a recent EMA
Common Questions About the Hiring Process 13 survey, understand that, due to limited sample size, the figures shared should not be considered statistically valid. Instead, the true value of the report lies in its multiyear trends analysis and averages. Those averages will help you predict market trends and plan appropriate recruiting strategies. As a result, the only valid metrics to track the most cost-effective recruitment methods lie in your own company’s historical results.

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The cost-per-hire (CPH) is a simple calculation: total costs associated with the recruitment process divided by the number of fulltime hires in a given period of time (typically a month). For example, if all recruitment-related expenses for a particular month totaled $10,000 and you hired eight FTEs (full-time equivalents) as a result, your CPH for that month would equal $1,250 ($10,000 divided
by 8).

Most HR practitioners who track cost-per-hire differentiate between
exempt and nonexempt recruitment costs. According to EMA’s 2000 survey, the average cost-per-hire looks like this:

Direct CPH Factored CPH*
Exempt hires $6,034 $10,057
Nonexempt hires $361 $1,203
Total hires $1,943 $3,886

*The Factored Cost-per-Hire includes recurring costs associated with overhead, recruiters’ salaries and benefits, and management interview time. The Direct CPH, in comparison, looks only at variable ‘‘hard expenses’’ such as advertisement fees, search costs, and internal referral fees.

Taken From : The Hiring and Firing Quention and Answer Book