Every open position on your org chart is quietly bleeding cash. While HR tracks time-to-fill as an operational metric, CFOs see something different: a daily drain on productivity, revenue, and working capital that compounds until someone finally accepts an offer.
Recruitment efficiency isn’t about minimizing what you spend on hiring. It’s about maximizing what you get back. This guide breaks down how to calculate cost-per-hire, time-to-fill, and the often-overlooked cost of vacancy, then shows you how to turn those numbers into a recruitment ROI that justifies every dollar invested in talent—especially with a financial lens like Fractional CFO Services for Staffing and Recruitment Firms.
What is cost-per-hire and why CFOs track it
For CFOs, cost-per-hire and time-to-fill aren’t just HR metrics sitting in a recruiting dashboard somewhere. They’re indicators of how efficiently your company converts cash into productive team members who actually drive revenue. When you look at these numbers through a financial lens, recruiting stops being a cost center and starts looking more like a capital deployment decision.
Cost-per-hire is the total expense to fill an open position, from the moment you post the job to the day your new hire walks through the door. The number includes both the obvious expenses and the ones that tend to slip through the cracks.
- Advertising and job board fees: External costs to attract candidates, which can range from a few hundred dollars to several thousand depending on the role and platform.
- Internal recruiter time: Hours spent screening resumes, conducting interviews, and coordinating schedules. This time has a real dollar value even if it doesn’t show up on an invoice.
- Technology and tools: ATS software subscriptions, background check services, and assessment platforms.
- Onboarding expenses: Training materials, equipment setup, and administrative processing.
Here’s the thing though: the raw cost-per-hire number matters less than what you’re getting for that investment. A $15,000 cost-per-hire that brings in a top performer who stays five years is a bargain. A $3,000 cost-per-hire that results in a bad fit who leaves after six months is expensive.
What is time-to-fill and how it affects cash flow
Time-to-fill measures the number of days from when a job requisition opens to when a candidate accepts the offer. HR teams track this metric for operational reasons, but CFOs care about it for a different reason entirely: every day a position sits vacant is a day your company loses money.
Extended vacancies create cash flow strain in ways that don’t always appear on a standard P&L. Remaining team members absorb extra work, which leads to overtime costs and potential burnout. Projects stall. Client deliverables slip. Revenue recognition gets delayed. For revenue-generating roles like salespeople, the math becomes even more stark because an empty seat means deals that simply don’t close.
A shorter time-to-fill translates directly to faster revenue generation and reduced losses. That connection makes time-to-fill a crucial ROI driver worth tracking alongside your other financial KPIs. For staffing firms in particular, long time-to-fill can also pressure liquidity—especially if you’re navigating payroll funding for staffing firms while trying to keep delivery and placements moving.
How to calculate the cost of vacancy
The cost of vacancy, often called COV, is a hidden financial drain that many CFOs overlook because it doesn’t appear as a line item on any report. Yet COV often dwarfs the actual cost of hiring someone. It represents the money your company loses every single day a key position remains unfilled.
Revenue and productivity loss
When a role sits empty, output drops. For client-facing positions, this might mean fewer billable hours or unclosed deals. For operational roles, it could mean slower project completion or reduced capacity to take on new work. Either way, the impact hits your top line directly, and the longer the vacancy persists, the more it compounds.
Overtime and contractor expenses
Someone has to do the work. When a position is vacant, remaining team members typically absorb the extra load, which often means overtime pay. Alternatively, you might bring in contractors or temps to bridge the gap. Both options frequently cost more per hour than a full-time employee would.
Delayed projects and client impact
Vacancies can stall critical initiatives, both internal and client-facing. A delayed product launch or a missed client deadline doesn’t just cost money today. It can affect retention and future revenue streams for months afterward.
The cost of vacancy formula
Calculating COV gives you a concrete number to work with rather than a vague sense that vacancies are “bad.”
COV = (Annual Revenue per Employee ÷ Working Days) × Days Position Remains Open
| Component | What It Measures |
|---|---|
| Annual revenue per employee | Average revenue contribution per team member |
| Working days | Business days in the calculation period, typically 250 |
| Days vacant | Duration the role remains unfilled |
For a company generating $100,000 in revenue per employee annually, each vacant day costs roughly $400. A 45-day vacancy? That’s $18,000 in lost value, which far exceeds most hiring costs.
How to calculate recruitment ROI
Recruitment ROI is the CFO’s tool for justifying hiring investments and comparing different recruiting strategies. It shifts the conversation from “how much did we spend?” to “what did we get for our money?” Here’s how to calculate it step by step.
- Identify total recruitment costs
Start by listing every direct and indirect cost associated with hiring. This includes job postings, agency fees, internal recruiter time valued at their hourly rate, technology subscriptions, background checks, travel for interviews, and any signing bonuses. Don’t forget the time hiring managers spend away from their primary responsibilities, because that time has a cost too. - Quantify the value of each hire
This step requires some estimation, but it’s worth the effort. Consider the new hire’s expected revenue contribution, productivity gains they’ll bring, or the financial impact of completing projects that were stalled.
For sales roles, you might use expected quota attainment. For operational roles, consider the cost savings from not using contractors or overtime. The goal is to put a dollar figure on what this person will contribute. - Apply the recruitment ROI formula
ROI = [(Value of Hire – Total Recruitment Costs) ÷ Total Recruitment Costs] × 100
If you spend $10,000 to hire someone who generates $50,000 in value during their first year, your recruitment ROI is 400%. That’s a number that makes the investment case clear to any stakeholder reviewing your budget. - Benchmark against industry standards
Compare your metrics to industry norms to identify whether your process is efficient or needs work. If your cost-per-hire is double the industry average but your quality of hire is exceptional, that might be acceptable. If it’s double and your turnover is high, you’ve found a problem worth solving.
Recruitment metrics CFOs track beyond cost-per-hire
A single metric like cost-per-hire doesn’t tell the full story. To get a complete picture of recruitment efficiency, you’ll want to track a portfolio of metrics that work together to reveal what’s actually happening.
Quality of hire
Quality of hire measures how well new employees perform and contribute to the company over time. It’s typically assessed through performance reviews, retention rates, and time-to-productivity, which is how long it takes a new hire to reach full effectiveness. A low cost-per-hire means nothing if the resulting hires underperform or leave within six months.
Retention rate
First-year turnover directly impacts recruitment ROI. When someone leaves early, you’ve lost your entire hiring investment and now face the cost of starting over. Tracking retention by source, role, and hiring manager can reveal patterns worth addressing.
Offer acceptance rate
This metric measures your employer brand strength and compensation competitiveness. Low acceptance rates inflate both time-to-fill and cost-per-hire because you’re spending resources on candidates who ultimately say no. A consistently low acceptance rate often signals issues with your value proposition that extend beyond recruiting.
Source of hire efficiency
Not all recruiting channels perform equally. Tracking which sources produce the best hires at the lowest cost allows you to allocate future recruitment budgets more effectively. Many companies find that employee referrals deliver the highest quality at the lowest cost, while expensive job boards sometimes underperform.
How to build a CFO recruitment scorecard
A recruitment scorecard transforms raw recruiting data into decision-ready insights. Think of it like a financial dashboard, but focused specifically on talent acquisition performance. The goal is to see at a glance whether your recruiting engine is running efficiently or burning cash.
Financial metrics to include
Your scorecard’s financial section might include cost-per-hire, cost of vacancy, recruitment ROI, and budget variance. These numbers connect recruiting activity directly to cash flow and profitability, which makes them easier to discuss in financial planning conversations.
Operational metrics to include
The operational section covers time-to-fill, quality of hire, retention rate, offer acceptance rate, and source efficiency. Together with the financial metrics, these give you a complete view of how well your recruiting process is performing.
Reviewing your scorecard monthly
A monthly review cadence allows for timely course correction. Small inefficiencies caught early stay small. Left unaddressed for a quarter or two, they compound into expensive, systemic problems that are much harder to fix.
How recruitment efficiency impacts enterprise value
Recruitment metrics connect directly to company valuation, which matters enormously for business owners planning an eventual exit. Efficient hiring signals operational maturity to investors and potential buyers. It demonstrates that you can scale without proportionally increasing costs.
On the other hand, high turnover and long vacancy periods are red flags during due diligence. They suggest underlying problems with culture, compensation, or management that could affect future performance. Buyers discount for these risks, sometimes significantly.
Turning recruitment from a cost center into a strategic investment
The CFO’s role in recruitment extends beyond tracking costs to actively shaping a hiring strategy that drives growth. By partnering with HR, you can align hiring plans with revenue forecasts and capacity planning, which turns recruiting into a strategic function rather than a reactive one.
- Align hiring with growth forecasts: Every new role on the plan maps to specific revenue targets or operational needs.
- Prioritize high-impact positions: Roughly 80% of your hiring value often comes from 20% of your roles. Focus resources accordingly.
- Build recruitment into financial planning: Treat hiring as a capital allocation decision, not an expense to minimize.
Why strategic financial guidance transforms your hiring decisions
A fractional CFO perspective connects hiring metrics to broader financial strategy, including cash flow forecasting, profitability analysis, and exit planning. At Bennett Financials, we act as the navigator for founders charting a course to their growth targets. When you’re trying to scale from $5M to $10M, knowing exactly how many people you can afford to hire, when to hire them, and what return to expect makes all the difference—especially with the right outsourced CFO leadership in your corner. Talk to an expert about building recruitment into your growth strategy, or lean on a dedicated fractional CFO services team to pressure-test the numbers.
