Time to hire and cost per hire: how to measure and improve them

What is time to hire?

Time to hire measures how long it takes to move one candidate from first contact to an accepted offer. The start point is the day the candidate enters your pipeline: they apply, or a sourcer or agent approaches them. The end point is the day they accept. The formula is simple: time to hire = date of offer acceptance minus date the candidate entered the process, averaged over all hires in a period.

Because it starts with the candidate, time to hire mainly tells you how efficient your selection process is: how quickly you screen, schedule interviews, collect feedback and make an offer. A long time to hire usually points to slow decisions and scheduling, not to a shortage of candidates.

How do you calculate cost per hire?

Cost per hire adds up everything you spend on recruitment in a period and divides it by the number of people hired in that period: cost per hire = (external costs + internal costs) / number of hires. SHRM lists cost components such as agency fees, advertising and job board fees, referral bonuses, travel and relocation, recruiter pay and benefits, and recruitment system costs.

How should you use these benchmarks?

Use benchmarks as a sanity check, not as a target. The figures above come from different countries, years, respondent groups and definitions. SHRM's figures describe US employers; the Dutch figure from Intelligence Group and RecBi covers recruitment agencies. A hospital hiring ICU nurses and a scale-up hiring junior sales staff will never share one realistic target.

The most useful benchmark is your own history. Measure per vacancy type, per seniority level and per source, and compare quarter on quarter. When a number moves, you know it is your process that changed and not the definition.

How do you measure time to hire reliably?

Most teams already have the data in their ATS. The problem is usually that dates are missing or entered late: a sourced candidate added to the ATS only after they reply, or an offer acceptance logged a week after the phone call. Fix the data entry before you draw conclusions.

• Define the start date per source. For applicants, the application date. For sourced candidates, the date of first outreach, not the date they replied.
• Log every stage with a timestamp. Screened, first interview, second interview, offer sent, offer accepted.
• Report the median as well as the average. One vacancy that stays open for months distorts the average.
• Split by vacancy type and source. Blended numbers hide where the delay really is.
• Measure the stages, not only the total. The total tells you there is a problem; stage durations tell you where.

How do you reduce time to hire?

Most delay is waiting, not working. A CV sits in a queue, feedback comes three days after an interview, a hiring manager's calendar has no room for a week. The fastest improvements come from removing those waiting times.

• Agree on criteria before you start. A kick-off that separates must-haves from preferences prevents rounds of "not quite what we meant".
• Set feedback deadlines. For example, feedback within one working day after each interview.
• Reserve interview slots in advance. Block time in the hiring manager's calendar when the vacancy opens.
• Cut stages that do not add information. Two interviews that test the same thing cost a week and add little.
• Keep candidates warm. Every silent week increases the chance they accept another offer.
• Let candidates schedule themselves. Self-scheduling removes days of back-and-forth email.

How do you lower cost per hire without lowering quality?

Cost per hire falls in two ways: more hires from the same spend, or less spend for the same hires. Cutting spend blindly, for example by dropping agencies for every role, often moves the cost to internal hours and makes time to fill longer. Look at the cost breakdown first and ask which lines buy results.

In breakdowns like the example above, internal sourcing capacity and the licences that come with it are often the largest line. When searching, screening and first outreach take less recruiter time, the same team can handle more vacancies without extra seats or sourcers. Our sourcing savings calculator estimates what that means for your seat and FTE costs with indicative assumptions, and our guide to recruitment automation explains which parts to automate first. For agencies, the same logic applies per placement; see AIcruiters for recruitment agencies.