Unlocking the True ROI of Recruitment

Maximising recruitment ROI for businesses requires a strategic approach, going beyond basic metrics to focus on key factors that drive long-term success

CREDIT: This is an edited version of an article that originally appeared on The HR Director

Organisations are wasting hundreds of thousands of pounds on inefficient hiring and retention as they throw money at skills shortages without measuring return on investment. That’s according to new data. Less than a quarter of organisations (24%) currently measure the return on investment of their hiring activity, while less than a third (31%) of those who are aware of turnover data at their organisation report they calculate the cost of labour turnover.

Measuring recruitment effectiveness requires more than tracking surface-level data. To maximise return on investment (ROI), organisations need to adopt a more nuanced approach.

Time to Fill

Time to fill a position is a key recruitment metric, but its impact on ROI is often overlooked. Prolonged vacancies can lead to productivity losses, overwork for existing teams and missed opportunities. Shortening the time to fill improves efficiency, as every day a position remains unfilled costs potential revenue and increases indirect expenses like overtime or project delays. To measure time to fill more effectively, recruiters should break it down into stages: sourcing candidates, engaging with them, conducting interviews, securing offer acceptance and onboarding. This segmented approach helps identify bottlenecks and refine each phase to improve hiring outcomes.

Cost per Hire

Cost per hire (CPH) is a key recruitment metric that covers both direct and indirect expenses. Direct costs include things like advertising, recruiter salaries and tools, while indirect costs cover onboarding, relocation and lost productivity during a new hire’s adjustment period. To assess recruitment campaign effectiveness, CPH can be linked to paid advertising metrics like cost-per-click (CPC) and click-through rates (CTR). If a campaign has a high CTR but low conversion, it may suggest improvements are needed in job descriptions or landing pages.

Quality of Hire

While speed and cost are important, the true measure of recruitment success is the quality of hire (QoH). A poor hire can cost a company up to 30% of the annual salary for the position, making QoH essential for long-term ROI. Key indicators for QoH include performance ratings, which compare new hire performance to established benchmarks, and retention rates, which track how long new hires stay and advance within the company. A strong QoH often leads to lower turnover, as focusing on candidate fit – both skills and culture – reduces costly attrition and improves stability.

By taking a more strategic approach to recruitment, businesses can not only improve efficiency but also maximise the return on investment in their hiring processes. Focusing on these key metrics will help hiring managers make more informed decisions, reduce turnover and ultimately deliver better service to customers.