What Is Recruitment? Process, Funnel and Metrics, With Formulas
Recruitment is the process of finding, attracting, assessing and hiring people to fill jobs in an organisation. It starts when a role is approved and ends when the chosen candidate accepts an offer and joins.
- Process: 7 steps — plan, write the job, source, screen, interview, offer, onboard.
- Funnel: applicants narrow at each stage; measuring the conversion rate between stages shows where candidates are lost.
- Metrics: the core four are time to fill, cost per hire, offer acceptance rate and quality of hire.
- Benchmark: SHRM's 2025 benchmarking put the average cost per hire at about $5,475 for non-executive roles.
What is recruitment?
Recruitment is the end-to-end process an organisation uses to identify a hiring need, attract people who could fill it, assess them, and hire the best fit. In human resources it is usually owned by a recruiter or talent acquisition team working with the hiring manager who has the vacancy.
Good recruitment does three things at once: it fills the role quickly, it controls cost, and it brings in someone who performs well and stays. Those three aims pull against each other, which is why recruitment is measured with several metrics rather than one.
Recruitment vs selection vs hiring vs talent acquisition
These terms are often used interchangeably, but they cover different parts of the work.
| Term | What it means | Scope |
|---|---|---|
| Recruitment | Finding and attracting candidates, then moving them through assessment to an offer | One vacancy, start to finish |
| Selection | Choosing between candidates through screening, interviews and tests | The middle of the recruitment process |
| Hiring | Making the offer and completing the paperwork so the person can start | The final step |
| Talent acquisition | Long-term planning for the skills a company will need, including employer brand and talent pools | Ongoing strategy across all roles |
| Staffing | Supplying workers, often temporary or contract, usually through an agency | Workforce supply |
Types of recruitment
| Type | How it works | Best for |
|---|---|---|
| Internal recruitment | Filling the role with a current employee through promotion or transfer | Roles needing company knowledge; fast and low cost |
| External recruitment | Advertising to and sourcing people outside the company | New skills, growth hiring |
| Employee referrals | Current staff recommend people they know | Higher-quality applicants and better retention |
| Agency recruitment | A staffing or recruitment agency finds candidates for a fee | Hard-to-fill or urgent roles |
| Campus recruitment | Hiring students and graduates through colleges | Entry-level and trainee intake |
| Executive search | A retained firm approaches senior candidates directly | Leadership roles |
| High-volume recruitment | Hiring many people for similar roles in a short time | Retail, logistics, customer support |
The recruitment process: 7 steps
Most organisations follow the same seven steps, whatever the role. The names vary; the sequence rarely does.
Step 1: Identify the need and plan
The hiring manager confirms why the role exists, what it must deliver, the budget and the deadline. The output is an approved job requisition. Time to fill is counted from this approval.
Step 2: Write the job description
List the responsibilities, the must-have skills, the nice-to-haves, location, and pay range. Keep must-haves to the few things that predict success; long wish lists shrink the applicant pool.
Step 3: Source candidates
Publish the job on your careers page and job boards, ask for referrals, search your existing talent pool, and approach passive candidates directly. Track where each applicant came from so you can calculate source of hire later.
Step 4: Screen applicants
Compare each application against the must-haves and shortlist the strongest. This is the stage where volume is highest and where resume parsing and AI screening save the most time.
Step 5: Interview and assess
Use the same structured questions and scoring for every candidate in a given round. Add a work sample or skills test where the job allows it. Structured interviews are more reliable than unstructured conversation.
Step 6: Select and make the offer
Compare scorecards, check references, agree the package and send the offer. Speed matters here: good candidates usually have other offers in progress.
Step 7: Hire and onboard
Complete contracts and checks, prepare equipment and access, and plan the first weeks. Recruitment is only successful if the person starts, performs and stays.
| Step | Main owner | Output | Metric to watch |
|---|---|---|---|
| 1. Plan | Hiring manager | Approved requisition | Time to approve |
| 2. Job description | Recruiter + manager | Published job ad | Views-to-apply rate |
| 3. Source | Recruiter | Applicant pool | Applicants per opening, source of hire |
| 4. Screen | Recruiter | Shortlist | Screening pass rate |
| 5. Interview | Interview panel | Scored candidates | Interview-to-offer ratio |
| 6. Offer | Recruiter + manager | Accepted offer | Offer acceptance rate |
| 7. Onboard | HR + manager | Productive employee | First-year attrition, quality of hire |
The recruitment funnel
The recruitment funnel is a way of picturing how a large group of applicants narrows, stage by stage, to the people you hire. Each stage has a conversion rate: the share of candidates who move on to the next stage.
Stage conversion rate (%) = candidates who reach the next stage ÷ candidates in this stage × 100
Here is the same example as a table. The company received 2,000 applications and made 10 hires.
| Funnel stage | Candidates | Conversion from previous stage | Calculation |
|---|---|---|---|
| Applicants | 2,000 | — | — |
| Passed screening | 300 | 15.0% | 300 ÷ 2,000 × 100 |
| Interviewed | 80 | 26.7% | 80 ÷ 300 × 100 |
| Offers made | 14 | 17.5% | 14 ÷ 80 × 100 |
| Hires (offers accepted) | 10 | 71.4% | 10 ÷ 14 × 100 |
How to read your funnel
- Low screening pass rate: the job ad is attracting the wrong people, or the must-haves are too strict.
- Low interview-to-offer rate: screening is letting through candidates who do not meet the bar, or interviewers disagree on what the bar is.
- Low offer acceptance rate: pay is off-market, the process is too slow, or the candidate experience is poor.
The funnel also works backwards for planning. If you need 10 hires and your rates match the example, you need about 14 offers, 80 interviews and 2,000 applicants.
Recruitment metrics and formulas
These twelve metrics cover speed, cost, quality and efficiency. Start with the first four and add the rest as your data improves.
| Metric | Formula | What it tells you |
|---|---|---|
| Time to fill | Date offer accepted − date requisition approved | How long the business waits for a role to be filled |
| Time to hire | Date offer accepted − date the candidate applied | How fast you move once a good candidate appears |
| Cost per hire | (Internal costs + external costs) ÷ number of hires | Average spend to make one hire |
| Offer acceptance rate | Offers accepted ÷ offers made × 100 | How competitive your offers and process are |
| Applicants per hire | Total applicants ÷ number of hires | How much volume you process for each hire |
| Interview-to-offer ratio | Candidates interviewed ÷ offers made | How well screening prepares the shortlist |
| Yield ratio | Candidates passing a stage ÷ candidates entering it × 100 | Efficiency of any single stage |
| Source of hire | Hires from a source ÷ total hires × 100 | Which channels actually produce hires |
| Cost per applicant | Spend on a source ÷ applicants from that source | Value for money of each job board or channel |
| First-year attrition | Hires who leave within 12 months ÷ total hires × 100 | Whether you are hiring people who stay |
| Quality of hire | Average of chosen indicators (e.g. performance rating, ramp-up time, retention), each scored 0–100 | How good the hires turn out to be |
| Recruitment ROI | (Value gained from hires − recruitment cost) ÷ recruitment cost × 100 | Return on recruitment spend |
Time to fill vs time to hire
The two are easy to confuse. Time to fill measures the whole vacancy; time to hire measures only the part after your eventual hire applied.
Example: a role is approved on 1 March, the successful candidate applies on 15 March and accepts the offer on 12 April. Time to fill is 42 days. Time to hire is 28 days.
Cost per hire: worked example
Cost per hire = (internal costs + external costs) ÷ number of hires
Internal costs include recruiter salaries, hiring-manager time and referral bonuses. External costs include job advertising, agency fees, software, assessments and background checks.
Example: in one quarter a company spends $30,000 internally and $25,000 externally and makes 10 hires. Cost per hire = ($30,000 + $25,000) ÷ 10 = $5,500.
You can run your own numbers with the free cost-per-hire calculator.
Offer acceptance rate: worked example
Offer acceptance rate = offers accepted ÷ offers made × 100
Example: 14 offers made, 10 accepted. 10 ÷ 14 × 100 = 71.4%.
Quality of hire: worked example
There is no single standard formula. Pick two to four indicators, score each out of 100, and average them.
Quality of hire = (performance score + ramp-up score + retention score) ÷ 3
Example: performance 80, ramp-up 70, retention 90. Quality of hire = (80 + 70 + 90) ÷ 3 = 80.
First-year attrition: worked example
First-year attrition = hires who left within 12 months ÷ total hires × 100
Example: 40 people hired last year, 6 left within 12 months. 6 ÷ 40 × 100 = 15%. The attrition cost calculator shows what that turnover costs.
Recruitment benchmarks
Benchmarks vary widely by country, industry and seniority, so treat them as a reference point and compare mainly against your own past results.
| Metric | Benchmark | Source |
|---|---|---|
| Cost per hire, non-executive | About $5,475 | SHRM Benchmarking, 2025 (US) |
| Cost per hire, executive | About $35,879 | SHRM Benchmarking, 2025 (US) |
| Cost per hire, earlier figure | About $4,700 | SHRM, 2022 (US) |
| Applicants per hire | About 180 | CareerPlug Recruiting Metrics Report, 2025 |
| Applicants invited to interview | About 3% | CareerPlug Recruiting Metrics Report, 2025 |
How to improve your recruitment process
- Measure the funnel first. You cannot fix a stage you have not measured. Record candidate counts at every stage for each role.
- Tighten the job description. Three to five true must-haves produce a better-matched applicant pool than fifteen.
- Automate screening. Resume parsing and AI ranking handle the highest-volume stage so recruiters spend time on people, not sorting.
- Structure interviews. Same questions, same scorecard, every candidate. It is fairer and it predicts performance better.
- Shorten the gaps. Most lost time is waiting between stages. Let candidates book interviews themselves and set a response deadline for feedback.
- Track source of hire. Move budget to the channels that produce hires, not just applications. The job board effectiveness calculator compares sources side by side.
- Keep a talent pool. Strong runners-up are the cheapest source for your next vacancy.
Where recruitment software fits
Recruitment software keeps every candidate, stage and metric in one place. An applicant tracking system records the funnel automatically, so the formulas above are calculated for you instead of in spreadsheets.
Track your whole recruitment funnel in one place.
HireGen parses resumes, ranks applicants with AI and reports time to hire and source of hire automatically. The Starter plan is free.
Free recruitment calculators and resources
- Cost-per-hire calculator
- Time-to-hire calculator
- Recruitment ROI calculator
- Attrition cost calculator
- Job board effectiveness calculator
- AI Recruitment Masterclass (free course)
Frequently asked questions
What is recruitment in simple words?
Recruitment is the process of finding, attracting, assessing and hiring people to fill jobs in an organisation. It begins when a role is approved and ends when the chosen candidate accepts an offer and joins.
What are the 7 steps of the recruitment process?
The seven steps are: identify the need and plan, write the job description, source candidates, screen applicants, interview and assess, select and make the offer, and hire and onboard.
What is a recruitment funnel?
A recruitment funnel shows how a large group of applicants narrows at each stage of hiring, from application to screening, interview, offer and hire. The conversion rate between stages shows where candidates drop out.
How do you calculate cost per hire?
Cost per hire equals internal recruitment costs plus external recruitment costs, divided by the number of hires in the same period. For example, $30,000 internal plus $25,000 external for 10 hires gives a cost per hire of $5,500.
What is the difference between time to fill and time to hire?
Time to fill counts the days from when a job requisition is approved to when an offer is accepted. Time to hire counts the days from when the successful candidate applied to when they accepted the offer, so it is always the shorter of the two.
What is the difference between recruitment and talent acquisition?
Recruitment fills a specific vacancy from start to finish. Talent acquisition is the longer-term strategy for the skills a company will need, and includes employer branding, workforce planning and building talent pools.
What is a good offer acceptance rate?
It depends on the industry and role, and published figures vary widely. Compare your rate with your own previous quarters first; a falling rate usually points to uncompetitive pay, a slow process or a poor candidate experience.
Which recruitment metrics matter most?
Start with four: time to fill, cost per hire, offer acceptance rate and quality of hire. Together they cover speed, cost, competitiveness and results. Add source of hire and stage conversion rates once those are tracked reliably.
How does recruitment software help?
Recruitment software stores every candidate and stage in one place, automates resume screening and interview scheduling, and calculates metrics such as time to hire and source of hire automatically.
Sources
- SHRM, Benchmarking Report, 2025 — cost per hire for executive and non-executive roles. shrm.org
- SHRM, "The Real Costs of Recruitment", 2022. shrm.org
- CareerPlug, Recruiting Metrics Report, 2025. careerplug.com
- ANSI/SHRM Cost-per-Hire Standard — basis for the internal + external cost formula.
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