How to improve ROI in recruiting
One of the most difficult challenges for HR is to demonstrate that they are actively contributing to the growth of Employer Branding.
In order to raise the level of company performance, it is necessary to invest in the planning of recruiting and Talent Acquisition campaigns aimed not only at filling a vacancy, but at bringing in people who stay and perform over the medium to long term.
It is clear that the effective recruitment of a candidate is not enough to sanction the success of the campaign, but it is necessary to determine the added value and the benefit of the recruitment for the company, measurable in terms of ROI.
ROI, an acronym for Return on Investment, measures how much has been invested in order to understand how effective the investment has been. Let’s look at it in more detail in this article.
SUMMARY
- What is meant by ROI?
- How and why to plan a correct recruitment strategy
- ROI: How to measure the success of a search and selection strategy
What is meant by ROI?
ROI is the acronym by which we refer to return on investment (ROI). It is a term borrowed from marketing and is applied in all those areas where you want to calculate the effectiveness of an investment. It measures how much an investment “returns” compared to the costs incurred.
In recruiting, it means evaluating whether the total cost of selection and onboarding is justified by the value brought by the new hire.
This indicator must be considered as the result of a cost-benefit analysis in which several variables intervene.
How and why to plan a correct recruitment strategy
Various factors influence the success (or failure) of a hire during the search and selection process. However, it is important to remember that a successful hire is not synonymous with a positive ROI.
Sometimes candidate selection is based only on the recruiter’s experience and perception — which is not always satisfactory. Other times, selection does not take place at all because there are not enough candidates or they are not in line with the job description.
In these cases, it means that the actions and investments have not worked and therefore, in order to track down new talent and improve ROI, it is necessary to think about a new recruitment strategy that considers multiple aspects: channels, application quality, timing, and cost per hire. Let’s examine them in detail.
Writing a job ad correctly
Before starting the search and selection process and writing a job ad correctly, the recruiter needs to know what tasks and activities will need to be performed, what kind of skills to look for, what the company’s requirements are and what needs of the candidate can be met.
Intercepting the right offline and online channels
A good recruiter must know how to take care of relationships with candidates (even potential ones), because the candidate could be hiding anywhere: among the company’s employees, in the CV database, on social networks. The ‘candidate persona’ is the ideal candidate: role, seniority, key skills, and the channels they use to look for a job.
This is why conveying a transparent, clear and positive image of life within the company is very important.
Integrate an ATS
Recruiting is a fluid process that is constantly evolving, so you need to know how to scale and plan your strategy for each selection.
Choosing a smart ATS like Inrecruiting has the advantage of automating some aspects of the pre-selection process for better matching between candidate and job announcement. From this point of view, questionnaires, video interviews, and CV database management enable recruiters to filter large volumes of applications and evaluate those that best meet requirements.
Reducing person-hours and shortening time to hire undoubtedly lowers the cost per hire: one of the most direct ways to improve recruiting ROI.
Follow key KPI metrics
To determine what kind of budget to invest in the search and selection process, an analysis of time, cost and other variables (KPIs) must be performed. A data-driven approach is the best way to allow the recruiter to make decisions that are backed by data.
Among the most useful KPIs are time to hire, cost per hire, and 6- or 12-month retention, to understand whether the hire truly lasts over time.
ROI: How to measure the success of a search and selection strategy
To understand whether a recruitment campaign generated a positive ROI, several factors must be analyzed:
- costs required to start the hiring process, such as job ad publication;
- estimated time for activities such as writing the job description, monitoring the posting on multiple platforms, viewing CVs and interviewing candidates;
- predictive performance evaluation in terms of job performance and team fit (comparison must be made with employees who hold the same job title and have the same level of experience);
- time spent on the selection process, specifically the amount of time each resource involved in the selection process, took time away from his or her primary job description;
- post-hire costs to provide the new hire with work tools;
- churn rate and retention: leaving the job a few months after hiring profoundly affects ROI, in terms of time and cost. In this sense, it is necessary to plan recruiting campaigns that focus on resource retention.
Find out how to measure your recruiting strategy with Inrecruiting.