Metrics continue to drive many of our business decisions. After all, the goal of your company isn’t just to serve clients with your services or products; it’s to create a sustainable income for you and your employees. So measuring the money that comes in—and goes out—is vital.
Some costs are easy to track—the cost of goods sold, for example. How much money does it take to craft your product? Or payroll—how much do you pay your employees?
But one area in which your return on investment (ROI) can be difficult to measure is recruitment. How do you make decisions on the amount of time spent bringing in new employees? What about onboarding them, training them, and mentoring them? The recruitment process is often a murky one, with casual conversations that lead to hiring pipelines, and it isn’t always cut and dried.
That being said, there are ways to measure ROI on recruitment. By measuring the amount of money spent on recruitment vs. the amount of money brought in, you can evaluate your efforts and ensure you’re making decisions that are effective. You can also bring management on board for future recruitment efforts and prove that recruitment really is worth the investment.
Gather Data
First and foremost, you can’t make any inferences from data you don’t have. You need a wide amount of data if you’re going to map out an effective recruitment strategy.
Consider gathering information such as:
- Hours spent working on recruitment efforts. How many employees do you have working on recruitment, and how often are they doing so?
- New talent brought in. How often do your recruitment efforts lead to a successful hire?
- Resources spent on recruitment tactics. Do your recruiters use an expensive software program for tracking leads? Do they regularly host or attend networking events?
- Value brought by new talent. When you do recruit top talent, are you bringing on employees with a high value to the company, or are they lower-level workers?
Once you have all the applicable numbers, you can start to see where you’re spending and where you’re earning.
Embrace the Art of the Exit Interview
When hires leave, are you taking the time to find out why they’re deciding to leave your company? Although it may seem odd to include employees in your recruitment pipeline, it’s important that HR professionals consider an employee’s entire lifetime with a company when considering his or her value. If you’re recruiting employees but consistently facing a high turnover rate, there’s likely a problem with your hiring efforts. There could a disconnect in either what you’re presenting employees vs. what their experience is or who you’re thinking you’re bringing in vs. who you’re actually bringing in. The goal of recruitment shouldn’t be to just fill an open spot—it should be to bring on employees who are going to contribute long term to the company. So pay attention when employees depart, and see if you need to take their reasons for exiting and implement solutions into your hiring process.
Take Stock of Open Positions
It isn’t rare for a company to wait … and wait … and wait on hiring efforts until the right person appears. In some situations, this is the right decision; you don’t want to implement a manager or lead without the proper vetting. The wrong person in a role can sometimes be worse than no one, but other times, leaving positions open for an extended period of time can be extremely damaging to your bottom line. If you don’t have the right person in place, other team members with less experience or skill may need to pick up the slack, or important jobs will go undone. This can have long-term effects on your company’s success and reputation.
Any losses from open positions should be considered when evaluating recruitment ROI. When you bring in new employees, not only should you consider the paycheck they’ll receive and the value they can add to the company, but you should also think through the losses you could accrue by not hiring someone for the open role.
Evaluate Your Sources
Are many of your employees coming from a few high-quality sources? Take the time to investigate where you’re seeing the most success from recruitment. If there are a few networking events, job boards, or contacts who consistently pass on top-tier employees, it may be worth investing more resources into those sources.
Similarly, if you have a piece of recruitment software that’s helping you track leads efficiently, consider upgrading or expanding it in order to get more benefits. The value of recruitment software isn’t always plain to see, but if you’re able to calculate the amount of time spent tracking recruitment leads and the amount of payoff you receive from those leads, it may become clear just how beneficial your software is.
Consider Training and Onboarding
Training and onboarding should still be considered part of the recruitment process. Once a person has committed to your company, you’re still spending time, energy, and resources making sure the person knows the ins and outs of his or her new role. Therefore, it’s essential you don’t forget training and onboarding costs when calculating ROI. If a role has an incredibly complicated training process but doesn’t actually bring in new revenue for a company, that’s an important thing to identify and manage.
Talk to Your Recruiters
This sounds obvious—of course, when making recruitment decisions, you should communicate with recruiters. But when it comes to finance-based choices, HR managers often ironically forget the human aspect. The truth is, recruitment isn’t black and white. Something may look as if it isn’t bringing in top talent, but it could actually be where recruiters first touch base with people who end up in your hiring pipeline. You can’t leave out the inside information recruiters may be able to provide.
Claire Swinarski is a Contributing Editor at HR Daily Advisor.