Glossary: HR & Recruiting Definitions

What is the offer decline rate?

Definition

The offer decline rate is a recruiting KPI that expresses how many applicants have declined a company’s job offer during the recruitment process.

Table of contents

What is the offer decline rate about?
How is the offer decline rate calculated?
How can the offer decline rate be reduced?

What is the offer decline rate about?

The offer decline rate is a measure of how many applicants have declined a company’s job offer at the end of the hiring process.

Knowing how many rejections companies receive for their job offers is important for the following reasons:

1. Insights into the quality of the recruitment process

Every rejection of a job offer costs companies money, and with every rejection, the cost of vacancy increases. To keep these costs in check, it is necessary to make the recruitment process as short and pleasant as possible for candidates.

This is where the offer decline rate comes into play. If a particularly large number of job offers are rejected, this is an important indicator that the recruitment process is not working as well as it might appear to the recruiting team.

2. Cross-checking the offer acceptance rate

There is another metric related to job offers: The so-called offer acceptance rate (OAR), which is the counterpart to the offer decline rate (ODR).

It can be helpful to check both metrics to see if the calculations are correct and if the respective figures are realistic. Of course, a high OAR also means a low ODR and vice versa.

Why do applicants reject job offers?

According to a German StepStone study from 2019, 29% of professionals reject a job offer at the end of an application process. Reasons for rejection vary widely, but some reasons are cited with striking frequency:

Hiring process takes too long

The most common reason why applicants reject an offer at the end is that the path from application to hiring (time to hire) simply took too long.

In the above study, for example, one in two applicants did not hear back from the company for more than 45 days.

Getting a faster or better offer

The fact that some companies take so long to complete a recruitment process has another unpleasant effect: The talent they are looking for often receives and accepts offers from competitors in the meantime.

If they have not dropped out at the end of the recruitment process, applicants often reject offers because they have received more attractive offers at the same time (more on this in the next point).

Job offer not attractive enough

It is no secret that qualified professionals have high expectations. If they reject a job offer, it is often because they were offered too little salary and/or holiday, unsuitable benefits, or a lack of development opportunities.

Too little/negative information about the company

All too often, there is also a lack of communication. Mutual expectations and wishes are often not communicated and agreed upon openly enough.

However, it can also happen that applicants find out too little or negative information about the company during their research or find a career page that is not informative enough.

This lack of transparency also often leads to the rejection of a job offer.

No cultural fit

Another common reason for rejection: A company shows too little initiative in the area of diversity, equity, and inclusion (DEI).

Young professionals in particular, attach great importance to diverse teams and a harmonious company culture, and are quicker to reject job offers if this is not offered.

How is the offer decline rate calculated?

Let’s finally take a look at how the offer decline rate is calculated in practice. The value is determined by dividing the proportion of rejected job offers by the proportion of all offers and multiplying the result by 100.

The formula for determining the offer decline rate is thus:

Offer decline rate = Number of rejected job offers / Number of all job offers X 100

We’ll give you an example in the next section.

Before that, however, it is important to mention that the number of all offers also includes job offers that were prepared but perhaps no longer actively submitted because the candidate dropped out of the recruitment process.

In this case, an offer would still have been made. The applicant’s withdrawal is then considered as lost interest, which is also a form of rejection—and must be considered as such.

Likewise, the job offers that were made verbally and rejected verbally must be included in the total of job offers to get truly meaningful values.

Case and calculation example

Assume a company wants to fill a position and has three candidates (candidates A, B, and C) in the final selection.

Candidate A rejects the job offer because the conditions do not suit them. A second offer was made to candidate B, but they dropped out in the meantime because it took too long. Only candidate C accepts the job offer.

This means that a total of three job offers are considered, two of which are rejected. If we put this into the formula, we get the following offer decline rate.

Offer decline rate = 2 / 3 X 100 = 66,67%

However, this is only an isolated case and would not be particularly meaningful on its own. Perhaps the company will soon have more positions to fill where an offer is accepted immediately or where even more offers are prepared and rejected.

Therefore, the ratio should be documented for each individual recruitment process, and the offer decline rate should be considered holistically, taking into account all relevant job postings. This can, for example, be done with the help of a spreadsheet.

How can the offer decline rate be reduced?

It’s actually not always that difficult to reduce the offer decline rate. Companies can take these simple measures:

Ask for feedback via survey

The best way to achieve better recruitment results in the long run: Ask applicants for feedback—for example by means of a short survey at the end of the recruitment process.

This can provide valuable insights into which processes need to be improved internally.

Develop the employer brand

As mentioned above, applicants do extensive research on their potential employers. In the process, employer branding is also examined.

By communicating their corporate culture and benefits in advance on their careers page and in their job advertisements, companies can better convey their employer branding.

Talents then know faster and better what to expect—and are more likely to accept job offers.

Improve communication strategy

Despite all the above suggestions, there is no way around faster and clearer communication with candidates.

Ideally, candidates should not only receive quick feedback, but also be told at the end of each application step how things will proceed—and ideally by when the decision will be made.

Otherwise, there is a high probability that they will lose patience by the time the offer phase comes around and are more likely to reject the job offer. Read more in our blog article on communication strategy in the hiring process.

Streamline the hiring process

The last measure concerns the way the recruiting team works. In general, the hiring process should be structured to effectively reduce the offer decline rate.

The use of an applicant tracking system (ATS) such as JOIN can help. It automates and streamlines certain workflows and centralises communication with applicants, leaving more time for the main goal: Successfully recruiting talent.