What a hire really costs, line by line

The number your ATS reports is agency spend plus job board licences divided by hires. It is a procurement figure wearing a talent acquisition label, and it is the one that reaches the board.

Last year we pulled every cost that a hire touches out of the general ledger: recruiter time at loaded rates, hiring manager and panel hours, tooling amortised per requisition, referral bonuses, and the output lost while the seat stayed empty. Four quarters, 1,240 hires.Relocation and immigration are excluded. They are large, but they apply to too few hires to belong in a per-hire average.

The ATS said 7,900 €. The ledger said 30,800 €.

Vacancy cost19,18262%

Agency fees5,50018%

Panel time3,74012%

Recruiter time1,4405%

Tooling, other9003%

General ledger, FY25 · engineering roles, Western Europe · n=1,240 · EUR, fully loaded

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Only two of those five lines sit in a talent acquisition budget. The largest one sits in no budget at all.

The line nobody owns

Vacancy cost is the output a team does not produce while a seat is empty. Most functions either ignore it or reach for a figure so aggressive that finance refuses to look at it: annual revenue divided by headcount, which quietly assumes a new engineer generates revenue on their first morning.

We used something duller and defensible. Take the fully loaded cost of the role, convert it to a daily rate over working days, and multiply by the share of a team’s committed work that actually stalls when the seat is open. That last number is the whole argument, and it is the one people want to skip.We measured it against sprint carry-over across four quarters. For teams already running at capacity it sat between 0.4 and 0.7.

At 78 days open and a stall share of 60%, it comes to 19,182 € per hire. Sixty-two per cent of the total, and more than three times the agency line everyone spends their time renegotiating.

Taking a month out of the time to fill returned more than renegotiating every agency contract we had.

Letter 014 · Cost of hiring

That is not rhetoric, it is subtraction. Thirty days off the median saves 7,378 € a hire against an agency line of 5,500 €. And unlike the agency line, you do not have to persuade a supplier to agree to it.

Run it on your own numbers

The model is below rather than in an appendix, because the assumptions are the interesting part. Change the stall share to something you would defend in front of your own CFO and watch what happens to the total. Set it to zero and the number falls by nearly two thirds, which is precisely why it is the assumption that usually goes missing.

Model · yours to change

Run it on your own numbers

Every figure below is derived from the five inputs. Change any of them and the whole model recalculates, including the total the board sees.

Base salary of the roleAnnual, before employer loading

110,000€

Interview roundsExcluding the recruiter screen

5

Interviewers per roundCounted per person, not per session

6

Days the seat stays openRequisition approved to offer accepted

78

Share of the team’s work that stallsThe honest number is rarely zero and never 100

60%

Share of these roles filled by agency

25%

Fully loaded cost per hire

30,762€

Vacancy cost78 days · 60% stalled19,182

Agency fees25% of roles · 20% fee5,500

Panel time45 hours at €833,740

Recruiter time32 hours at €451,440

Tooling, otheramortised per hire900

Method as published · loading factor 1.36 · 1,800 working hours and 220 working days per FTE year · agency fee taken at 20% of base salary

Panel time is the budget nobody signs

The second unowned line is smaller and much easier to move. Five rounds, six interviewers, an hour each plus preparation and debrief, at engineering loaded rates: 3,740 € per hire, appearing in no hiring budget anywhere in the company.

It is not that nobody knew interviews cost something. It is that the cost lands in engineering salary lines, spread across dozens of cost centres, in fifteen-minute increments that no one adds up. The only person positioned to add them up is the one running the funnel, and that person is usually measured on time to fill.

So we asked a narrow question: after round three, how often did the next round reverse the recommendation?

Round four changed the outcome in three per cent of cases, at a panel cost of roughly twenty-five thousand euros per changed decision. Round five, where teams ran it, was worse by a factor of three.

That is not an argument for hiring carelessly. It is an argument that the fourth round was buying confidence rather than information, and that the confidence was being bought at a price nobody had ever been shown.

What changed afterwards

Three things, none of them procurement.

1. Interview loops for engineering dropped from five rounds to four, with the debrief formalised so round three carried the weight round four had been carrying informally.
2. Scheduling moved to a fixed weekly panel slot. Unglamorous, and worth sixteen days of median time to fill on its own, more than any other single change we made.
3. Vacancy cost became a line in the monthly operating review, next to time to fill. Not because it is precise, but because it is the number that makes a hiring manager answer a scheduling request the same week.

Twelve months on, the ledger figure is 26,000 €. The agency line has not moved at all.

That is the whole argument. The lever is process design, not procurement, and it only becomes visible when the cost is measured where it actually falls.

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If you want to run this yourself: ask your finance business partner for the cost centre codes behind interviewing time, and ask your ATS for scorecards by round with the final decision attached. Neither request is unusual. The first one is the one people forget to make.