In this day and age, data drives many of the decisions we make as business leaders. While much business may be done on instinct, experience and expertise, there’s absolutely no shame in interpreting and actioning the items our own data is telling us to.
Every aspect of a business is broken down into data. What is our CPC? Our cost per lead? What are our conversion rates? How does X directly translate into Y?
But, there’s one area of every business where return on investment can be harder to fully analyse: recruitment.
How to measure recruitment ROI
Can people – humans, real living beings – be turned into a piece of data on a sheet? It’s my instinct as a business leader to say, no, that’s not why we hired you. And that’s totally valid; alas, it doesn’t change the fact that behind every hire there is an agenda. It’s an agenda to drive the business forward, to reach the next goalpost, to hit the target you’re working towards.
So return on investment is a real thing.
But how to do so? How do we measure recruitment ROI? Is it possible to truly understand how much we spent vs how much value this individual adds to the business?
First, gather the data.
Your starting point consists of a number of things:
- How many hours are spent on recruiting? How long did it take you to find this person? We’re not talking days or weeks – how much time was spent proactively working on this hire? Think: time spent deliberating on who is needed/what the profile looks like; time spent writing the job advert; reviewing applications; interviewing; negotiating; paperwork; and so on and so forth.
- How long do individuals typically stays with the business? Once we begin looking into the cost per hire vs longevity of hire, we’re able to set budgets effectively and understand what we should be aiming for.
- Why do people leave our business? Ah, the art of exit interviews. While much of this ‘data’ may seem quantitative, we can break it down into digestible numbers – how many reasons are related to this issue, or mention this aspect, or come down to XYZ? When it comes down to a tally, we can learn a ton about some solid areas to improve on.
Next, break it down.
There are innumerable different aspects of recruitment which can be broken down into numbers. Once you have any/all of these at hand, it’s possible to truly work out how much each hire costs. From here, it’s a simple step of looking at the performance of your new hire to understand and analyse the ROI.
The intangibles us data-led folk sometimes forget to mention
While almost anything can be eventually broken down into informative numbers and rows of data, recruiting is a human activity for the purpose of finding other humans with whom we connect.
That means, there’s only so far the data can take you.
Sometimes it’s not about hiring for productivity or profit; it’s about hiring for culture. Sometimes, value doesn’t come in the form of a number or metric we can track.
Just food for thought.
While understanding how to measure recruitment ROI is, in fact, possible, that doesn’t mean that trying to analyse every human being you hire down to a number or figure on a balance sheet is always a good thing. If ever, that is.