From Cost Center to Profit Engine: How Talent Acquisition Drives Real Business Value

by: Justin King, Director of Solution Design |
April 1, 2025

Recruiting is too often viewed as a cost center—a necessary but expensive function rather than a revenue driver or value generator. It’s seen as maintenance, much like changing the oil in a car—something that needs to be done to keep it running but doesn’t add value.

To justify their function, talent acquisition (TA) leaders often highlight improvements in hiring metrics like reduced time-to-fill or lower cost-per-hire. While these are important to track, they don’t inherently demonstrate business impact. Simply stating that time-to-fill has improved won’t convince a CFO to expand your budget, nor will showcasing strong interview-to-hire ratios make leadership see recruiting as a growth enabler rather than an operational cost.

Maximum Return on Investment (ROI) requires more than savings

Reducing costs is not the same as creating value. If TA leaders want a seat at the table, they must move the conversation beyond efficiency metrics and toward business outcomes. The real question isn’t how much hiring costs—it’s how much value it generates.

However, proving recruiting’s financial impact is not always straightforward. Every company has a different cost structure, and some commonly used justifications—such as reducing regrettable overtime—are more complex than they appear. Cutting 1,000 overtime hours doesn’t necessarily result in the savings of the entire overtime wage premium, as other factors like benefits, holiday pay, and vacation accruals come into play.

Similarly, reducing lost revenue due to labor shortages is a viable way to show value, but it doesn’t apply universally. Not every company has backlogs to clear, new facilities to open, or orders going unfulfilled due to capacity constraints—all of which a strong recruiting function could help solve, but only if those scenarios exist in the first place.

TA leaders looking for a clear, defensible, and widely applicable way to quantify their impact should look at their cost of vacancy. Not only does it directly tie recruiting speed to business performance but it’s also relatively simple to calculate regardless of industry or company size.

Cost of vacancy: A clear business case for recruiting

For every day a role goes unfilled, the organization misses out on the revenue and productivity that employee would generate. Here are two different methods for calculating cost of vacancy, and how to show revenue capture through efficient recruiting operations.

Method 1: Revenue per employee

A simple way to measure cost of vacancy is to look at revenue per employee per day. There are 2 scenarios to consider here

  1. Where employees have a direct and measurable impact on revenue. For example, if your average machinist can make 10 products a day that generate $1,000 each then their revenue per day would be $10,000.
  2. Where employees have a less pronounced tie to revenue:
    • Take the company’s annual revenue and divide it by the total employee count to determine the revenue each employee contributes annually
    • Divide that number by 260 or 365, depending on whether you are measuring business days or calendar days.
    • Multiply by the reduction in time-to-fill (TTF) and the number of hires.

For example, if a company generates $200 million in annual revenue with 1,200 employees, each employee contributes $166,667 per year or about $641 per day (assuming 260 business days).

  • If the TA team reduces time-to-fill from 41 days to 33 days, that’s an 8-day improvement.
  • This means each hire is now generating $5,128 in additional revenue that would have otherwise been lost.
  • If the company hires 200 people per year, that’s a $1,025,600 financial impact.

Depending on your TTF numbers and the revenue per employee, this can be a very large number. Some may argue that not all revenue is driven by employees and that other factors such as intellectual property, equipment, and investments also contribute. The next formula accounts for this by focusing on employee compensation and gross margin.

Method 2: Salary + gross margin

If revenue per employee doesn’t resonate with leadership, another way to measure cost of vacancy is to use salary plus gross margin to estimate an employee’s financial contribution. While not all employees are revenue generating, the fact that we pay them makes a strong argument that they are worth at least that, otherwise, why would we hire them. Adding in the gross margin gives a more realistic viewpoint of their value for this calculation.

  1. Take the fully loaded cost of an employee (salary + benefits + payroll taxes).
  2. Adjust it based on the company’s gross margin.
  3. For salaried workers, divide by 260, and for hourly workers, multiply the hourly rate by 8 to give you their daily revenue contribution.

For example, if an hourly factory worker has an hourly rate of $20 per hour, your employee burden rate is 30% (benefits and payroll taxes) and the company’s gross margin is 40%, then their value to the company is:

($20 X 1.3) / (1-0.4) ​= $43.33 per hour

That means this employee contributes $346.67 per day in value.

  • If TA reduces time-to-fill by 8 days, the company is gaining $2,733 in value per hire.
  • Across 200 hires per year, this adds $554,600 in revenue capture.

Final thoughts: TA must speak the language of business

If TA leaders continue to focus on cost savings, they will always be seen as a cost center rather than a business driver. Reducing cost-per-hire, or improving interview-to-hire ratios are valuable, but they don’t inherently demonstrate how recruiting fuels growth and profitability.

Shifting the conversation to cost of vacancy is a solid first step. It provides a clear, defensible financial model that directly ties hiring speed to business performance. When roles remain unfilled, productivity declines, revenue opportunities are missed, and organizations operate below full capacity. By quantifying the financial impact of hiring delays, TA leaders can transform recruiting from an operational necessity into a strategic investment.

However, cost of vacancy is just the start. Once leadership understands that hiring gaps have measurable financial consequences, the conversation can evolve into a broader discussion on recruitment value.

  • Strategic workforce planning: Instead of reacting to hiring needs as they arise, TA leaders can work proactively with finance and operations to forecast talent demands, ensuring that hiring aligns with business growth.
  • Quality of hire impact: Beyond just filling roles quickly, analyzing performance, retention, and long-term business impact of new hires can further demonstrate TA’s contribution to organizational success.
  • Revenue-generating hiring strategies: In industries where sales, research and development, or customer-facing roles directly impact revenue, TA can prove its value by tying hiring efforts to revenue growth and market expansion.

By moving beyond operational metrics and speaking the language of business, TA leaders can reposition themselves as key drivers of growth, innovation, and profitability. When recruitment is viewed as a strategic function rather than a cost, leadership will not only recognize its impact, they’ll invest in it.