How HR Leaders Should Build the Recruiting Function Their Company Actually Needs

"Fix hiring" lands on an HR leader's desk long before anyone decides what fixing it should look like. So the structure gets chosen by accident. Someone posts a recruiter role, or calls three agencies, and whoever answers first becomes the plan.

The better starting question is what shape the function should take at your actual hiring volume. SHRM's 2025 Benchmarking Report puts the average cost per hire at $5,475 for non-executive roles, and only 20% of organizations track quality of hire at all. Most companies know what hiring costs them but few know what it returns.

When should you bring recruiting in-house, and when should you keep it with an outside firm?

Decide this on hiring volume and predictability, not on headcount. Two companies with 200 employees can need completely different setups.

The math has a crossover point. At roughly 15 to 20 hires a year, the fully burdened cost of an in-house recruiter (salary, benefits, sourcing tools like LinkedIn Recruiter, and an ATS) lands in the same range as what you'd pay in contingency fees, which typically run 15% to 25% of first-year base salary per hire. Below this hiring rate, an outside firm is usually the more efficient path. Above it, the math starts working in your favor to build out the recruiting function.

Predictability matters as much as volume. Steady volume of 20 to 25 hires a year with a headcount plan you believe in points to building in-house. Unpredictable spikes, say eight people next quarter and nobody for six months, point to partnering. A consistent baseline with surges on top points to a hybrid model.

Then there are the signs your current setup is already breaking. Candidates going through six to eight separate interview cycles because your team isn't aligned on scorecards. Late-stage drop-off above 30% to 40%, where candidates withdraw because they took another offer, which usually means your decision pipeline is too slow. Hiring managers losing 15 or more hours a week to interviewing. If you want to pressure-test where your process is losing time, this breakdown of time-to-hire is a good place to start.

Both timing mistakes are expensive. Build too early, usually during a hiring spike or right after funding, and you carry fixed salary and software costs long after hiring slows. Build too late, forcing managers to recruit well past 25 or 30 hires a year, and you pay for it in agency fees that climb into six figures and managers who stop doing their actual jobs.

Which recruiting roles should you hire, and in what order?

Hire one full-cycle recruiter first. After that, let the symptom pick the second hire.

Three different problems look similar from the outside and need different answers:

• Requisitions are sitting, roles are staying open longer, and hiring managers are waiting. That's a capacity problem. Add another full-cycle recruiter.
• Your recruiter can manage more candidates but can't find enough of them. That's a sourcing problem. Add a sourcer.
• Your recruiter is buried in scheduling and administration. That's a time problem. Add a coordinator.

When all three happen at once, which is common, I'd prioritize another strong full-cycle recruiter first, then unbundle sourcing or coordination as volume grows. A second full-cycle recruiter can absorb any of the three. A specialist can only absorb one.

Before you add a coordinator, look hard at what your existing tools could already be handling. A fair amount of scheduling and administrative work can be automated now, and HR HUB's guide on what to automate is worth reading before you convert that work into a salary.

Use capacity data to verify the load on each recruiter. SHRM's 2026 Recruiting Executives Benchmarking puts the median at 25 requisitions per recruiter, up from 20 the year before. Gem's 2026 Recruiting Benchmarks Report, drawn from 165 million applications and 1.2 million hires, found recruiting headcount down 14% against 2021. Teams got leaner and the work didn't. If your one recruiter is well past 25 open roles, you don't have a performance problem.

A talent acquisition lead comes later, once you have recruiters to lead. Recruiting operations and analytics come later still, once you have enough volume to have something worth measuring.

Why isn't "hire someone from a staffing firm" automatically the right first move?

Agency experience isn't a red flag. It's just not the qualification people think it is.

Agency work rewards speed across many clients, plus business development. Internal work rewards depth on one employer. An internal recruiter represents only your brand, not multiple clients. They're building real relationships with your leadership and decision-makers, and they come to understand your culture in a way an outside recruiter can't replicate from the outside. Those are different jobs. Being excellent at the first doesn't mean someone will be good at the second.

The test I'd apply: has this person built a recruiting program somewhere, or have they only filled requisitions inside one? Ask what they stood up, what it looked like when they arrived, and whether what they built complements what you're trying to accomplish. A strong sourcer who has never owned a full function is a different hire than someone who has stood one up before, and for your first recruiter that distinction matters more than almost anything else on the resume.

Define the scope before you interview anyone. Is this role recruiting, account management, business development, or a full desk? Put the measures of success in the job description, so nobody is guessing later.

The biggest setup mistake I see isn't the hire. It's the absence of a firm agreement on expectations before that person starts. Are degrees required? Will the interview process be applied consistently to every candidate? Will you use assessments or other third-party screening tools? Skipping that conversation creates real liability, and inconsistent process is one of the fastest ways a new internal function runs into trouble it never saw coming.

One more thing. Let the recruiter set up their own systems, in partnership with leadership on the guidelines and processes those systems need to support. I've watched companies experience significant internal recruiter attrition because leadership wanted to control every decision. Empower whoever you hire to have a voice in how the role runs.

An outside firm still earns its place after you build, on surges, hard-to-fill searches, and executive roles. Building in-house isn't a decision to never work with anyone again.

What are the early signs a new internal recruiter will work out?

Give them a runway first. If no system exists when they arrive, expect several months to put a real plan in place: sourcing channels, an interview process, working relationships with hiring managers. Volume before that foundation is set isn't a fair measure of anything.

Within that, here's what I watch:

• 30 days. Do they understand the business, the roles, and the hiring managers? Are they sourcing, building pipeline, and getting qualified candidates submitted?
• 60 days. Is the activity converting? Candidates should be interviewing, pipelines should be healthy, and hiring managers should feel like they're finally seeing the right talent.
• 90 days. Can they own the desk? I'd expect offers and hires, good movement on requisitions, strong hiring manager relationships, and noticeably less hand-holding.

Two warning signs show up in the interview if you're listening for them. The first is indirect answers. If someone consistently talks around a question instead of answering it, I pay attention, and the same goes for vagueness about their own performance, accomplishments, or numbers. The second is a lack of connection. Recruiting is a relationship business. If they struggle to build rapport or create a natural back-and-forth with you, that will translate directly to how candidates and hiring managers experience them.

After the start date, watch for perfecting the search instead of talking to people, and for a recruiter who asks no questions at all.

Finally, define the quality of hire before their first day. Only 20% of organizations track it, which means most companies measure a recruiter on activity and then judge them on outcomes nobody wrote down. Decide what a good hire looks like at your company, and make sure the onboarding that follows supports it. HR HUB's onboarding checklist is a reasonable starting framework.

Five questions to answer before you post the role

1. How many hires are you making in the next 12 to 18 months, and how confident are you in that number?
2. What's your fully loaded internal cost against what you're currently spending in fees?
3. Which role are you hiring first, and what's its actual scope?
4. Who owns setting up the tools and process, you or the person you hire?
5. What does the 90-day scorecard say, and does the recruiter see it before they accept?

Answer those five and the shape of your recruiting function stops being a guess. Most companies I talk to don't have a hiring problem. They have a structure problem that shows up as a hiring problem.

About the author

Cheryl Anderson is President of Anderson Recruiting Consultants (ARC), which she founded in 2006. She has worked in recruiting since 1998 and has personally placed more than 2,000 professionals since 2003. ARC works exclusively with the search, staffing, and solutions industries, placing sales talent, recruiting talent, and back office leadership. The firm is a well-rounded expert that partners with clients on true headhunting, with white glove service, to source Rockstar talent. Cheryl is a University of Tennessee graduate and an Atlanta native, and she leads the firm alongside her husband, Walter Anderson, VP of Operations.