Imagine hiring someone who seems perfect for the job. Great, right? Except, the process takes six months and costs ten times what you wanted to spend. And at the end of it, the person leaves in less than a year.
Did that hire deliver the return on investment (ROI) you’d hoped for? Probably not—but it depends on how you define ROI.
In the hiring process, achieving a good ROI isn’t always as straightforward as making a strong hire. Thinking carefully about what constitutes ROI for you is crucial if you want to measure and optimize the effectiveness of your hiring process.
Without consistently tracking ROI over time and comparing it to your benchmark data, you could be wasting valuable time and resources at every turn. So how can you define what constitutes ROI for your company? It starts with deciding what matters most to you in your hiring process and finding ways to routinely measure those success factors.
To help you get started, here are a few metrics you might consider.
Cost per hire
It’s hard to ignore the bottom line. While bigger companies might have more resources to pump into the hiring process, smaller ones may need to operate lean. That means paying attention to every dollar spent, from the cost of placing job ads to the salary of the person sorting through resumes and conducting screenings.
If cost per hire is your biggest concern, start tracking how much you’re spending (not only the dollar cost, but also the time spent) and where. This will allow you to spot areas of high cost and low return, like paying for ads on job sites that produce few qualified candidates.
Time to hire
The clock is ticking. Time to hire might be crucial, especially if you work in a high-turnover environment, or if unfilled roles could seriously hurt your organization or the people it serves.
To track time to hire effectively, you first need to ensure consistency at the start and end points. Does the clock start when the job ad is placed, or when you first sit down to write the job description? Does it end when the offer is made, or when all the paperwork is signed?
When you know that, start measuring how long each individual chunk of the process takes. Three days of pre-screening here. A week spent on interviewing there. Another full week between the final interview and the offer. It will quickly become clear if one part of the process is eating up all your time, and then you can explore options to streamline it.
Quality of hire
This metric is a tricky one, because it often depends on subjective definitions of quality. A highly successful sales hire might be determined objectively by the dollars they bring in, but it’s hard to gauge an engineer the same way.
If quality is your ultimate definition of ROI and you don’t mind spending more or taking longer to ensure it, it’s important to settle on what quality means for you—and keep it consistent between each new hire. Using standardized performance evaluations to measure quality is just one way to do this.
An employee who costs more to hire but stays with the company for five years may represent a stronger ROI for you than one who is cheap to bring on but leaves within a year. Be sure to keep accurate and up-to-date records on start and end dates, so over time, you can see any weaknesses that may be missed because of the long time period it may encompass patterns between hiring practices and length of tenure.
The key to measuring attrition is patience. Unless you already have records to look back on, it’s going to take some time to find the benchmarks needed to compare against.
Measure and meet your ROI, whatever metric you’re using
When you know what the hiring ROI looks like for your company, you can start measuring the success of your hiring process over time. This will provide the insight you need to tweak and enhance your process, helping you meet—or even exceed—your expectations for what makes a successful hire.
Luckily, you don’t have to go it alone. There are plenty of technology tools out there that can help you keep track of your most important metrics.
Many applicant tracking systems (ATS) have some tracking capabilities built in. Before investing in one, check that it offers the selection of metrics that matters to you and the management team.
Or you can use career.place. Our intuitive platform lets you define what you need in a hire, evaluate candidates for potential, and keep track of everything, all in one handy place. And since career.place also streamlines your process and helps you objectively find top performers, it’s easy to boost your ROI, quickly and easily, however you define it.
Discover how we can help you get the most out of every hire. Try career.place today.