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Totting up recruitment metrics might sound like another task on a yawningly long to-do list. But recruitment software is an asset to your organisation, and like any asset, it pays to understand its specific role in your business success.
Luckily, many modern HR recruitment software solutions contain in-built analytics to deliver valuable data at the touch of a button. But which numbers should you collect to get to grips with your return on investment?
Our guide digs into nine specific metrics to calculate the ROI of your recruitment software and provide insights into your hiring processes. Spoiler alert: you’ll learn how to track:
- Time to fill and time to hire
- Cost per hire
- Diversity
- Candidate experience
- Recruiter productivity
- First-year attrition
- Offer acceptance rate
- Application completion rate
- Quality of hire
Why should you measure recruitment software ROI?
Tracking the results of your recruitment software allows you to:
Justify business costs to stakeholders
Top of the list is money. Perhaps you’ve been trialling a talent acquisition tool for a few months and need to report results back to your decision-makers so you can continue using it or investigate another option.
Your C-suite will typically want to know the upfront, monthly, or annual cost of your recruitment software and what it delivers. They may also evaluate the price of alternatives like external recruiters to choose the right solution based on recruiting budgets.
Refine your talent acquisition strategies
At its core, recruitment is all about acquiring top talent for your business using any tool or strategy to attract, engage and hire the right people for the right roles.
So, measuring the ROI of your software enables you to optimise your overarching hiring strategies and identify potential areas of improvement.
Improve work efficiency
If you've ever hired or worked with a candidate who turned out to be disappointing, you'll understand the value of measuring employee output. Effective recruitment software will ensure you hire talented personnel who boost your team's productivity and deliver better results for your customers.
9 metrics to calculate the ROI of recruitment software
Review the following metrics to reveal any obstacles in your hiring funnel. Keeping track of these will improve the quality of applicants and employees you hire.
1. Time to fill and time to hire
Time to fill refers to the time between HR approving a job requisition and when a candidate accepts a job offer. This is a speed-based metric—specifically, how quickly you advertise your open positions, then find and hire quality candidates.
Time to hire is slightly different from time to fill, as it measures the length of the candidate's journey, from the date of their application to the date they accept a job offer.
These are essential metrics because open vacancies cost your business money in terms of lost productivity. So, you’ll measure how effective your recruitment software is at each of these recruitment stages:
- Job board advertising
- Screening
- Interviewing
- Candidate communication
Use industry benchmarks to determine how your time to fill compares to average rates in your niche. For example, LinkedIn's Economic Graph team published median time to hire rates based on an analysis of 400,000 hires across the LinkedIn platform. These vary considerably depending on the industry and role. For example, the median time to hire for administrative or customer service roles is 33 and 34 days, respectively, but research and engineering roles take up to 48 and 49 days.
2. Cost per hire
Cost per hire reflects the total costs of recruiting a new employee, including the cost associated with advertising and screening, interviewing, onboarding, and everything else in between.
This metric reveals the efficiency of recruitment processes and compares:
- the cost of using recruitment software
- the cost of manual processes in-house
- the cost of using an external recruitment agency
Benchmarking data from the Society for Human Resource Management puts the average cost per hire at $4,700. However, a more accurate estimate would be to budget three to four times the position's salary. Edie Goldberg, the founder of California-based talent management and development company E.L Goldberg & Associates, estimates that “soft costs” make up 60% of total hiring costs. These include the time that department leaders must invest in the hiring process.
Try this formula to calculate your cost per hire.
Total recruitment costs divided by the number of hires made in a set period = cost per hire
When weighing up these numbers, remember to factor in any additional costs associated with recruitment, such as ongoing marketing, software add-on features, subscription fees, or payment to third-party companies such as aptitude testing providers if you're not running an all-in-one platform like Applied.
The impact of turnover reaches far and wide, including the cost of:
- terminating the employment
- replacing the employee
- struggling with a vacant position on the team
- lost productivity
This calculation focuses your attention on hiring quality candidates who are a better fit for the roles you're hiring for. When you recruit applicants who are destined to do well for your business, they're less likely to seek a role elsewhere.
That's why Applied customers are delighted to receive a 93% retention rate after the first year. This is 55% higher than the Work Institute's industry benchmark.
| Mission / Values Alignment | Culture Fit Alignment |
|---|---|
| Passion for your company’s missionA shared approach to working/collaborating | A shared educational, cultural or professional backgroundSimilar demographic (age, social class etc)Mutual hobbies/interests |
| Mission / Values Alignment | Culture Fit Alignment |
|---|---|
| Passion for your company’s missionA shared approach to working/collaborating | A shared educational, cultural or professional backgroundSimilar demographic (age, social class etc)Mutual hobbies/interests |
| Mission / Values Alignment | Culture Fit Alignment |
|---|---|
| Passion for your company’s missionA shared approach to working/collaborating | A shared educational, cultural or professional backgroundSimilar demographic (age, social class etc)Mutual hobbies/interests |
3. Diversity
Diversity metrics aren't about meeting a diversity quota by counting the different backgrounds your applicants or hired employees hail from. Instead, it's about understanding how your recruitment software attracts the diversity of candidates who apply for roles. Then, it’s about how you enable the most talented to progress regardless of their background, gender, race, or educational experience. Useful metrics to track include:
- Diversity of applicants vs. actual hires: a significant mismatch could unveil bias in your hiring process
- Staff retention: check the diversity of the employees who remain at your organisation and those who leave within the first year. A disproportionate loss of employees from underrepresented backgrounds could signal problems with inclusivity throughout your company culture.
- Diversity across organisational levels: if your workforce becomes homogeneous higher up your org chart, this could be because your company doesn't give everyone an equal opportunity to progress. For example, 1 in 3 Black women leaders has been denied or passed over for opportunities because of personal characteristics, including their race and gender.
- Pay equity: compensation is an easy metric to track. Compare diversity with race, gender, role, tenure, and age to better understand your company’s role in closing the wage gap and achieving pay parity.
4. Candidate experience
Candidate experience holds much sway with all applicants—both those you accept and reject. And it's something we care passionately about at Applied, with our platform scoring 9 out 10 for candidate experience, including unsuccessful candidates.
But what are potential hires looking for from their experience as job applicants?
Strong communication is integral, with over 60% of rejected job seekers stating they’d be more inclined to apply for a future job at the same company if they received feedback during the hiring process.
And lengthy, clunky job applications are out. 70% of candidates won't submit a job application if it takes more than 15 minutes to complete. While 93% of millennials said that a company having up-to-date technology is an important aspect when deciding to accept or reject a job offer.
Remember: disgruntled candidates can significantly impact your employer brand. A rough recruitment ride could lead to them telling their friends and network about their poor experience or leaving negative posts on social media. Tracking candidate experience will keep you focused on providing a smooth process.
5. Recruiter productivity
The right recruiting solution should support your hiring team by taking monotonous, time-consuming tasks off their plate. This might include automated emails and reminders to streamline the application process.
Track recruiter productivity metrics such as:
- time spent on recruitment tasks
- number of applicants processed each day
- number of interviews conducted
- number of offers accepted each month
Drilling down into the numbers will deliver a clear insight into how the software is speeding up recruitment processes. Ideally, you’ll also notice that it reduces bottlenecks such as slow candidate responses or inaccurate screening.
The information you’ll glean from these metrics should be used to hone recruitment activities over time. It’ll also allow you to benchmark each recruiter against the team and identify any requirement for further training or resources.
6. First year attrition
37.9% of employee turnover happens within the first year of a new hire joining an organisation, delivering little to zero return on the investment made to hire a candidate in the first place.
7. Offer acceptance rate
Offer acceptance refers to the number of candidates who confirm they'd like to work for your company after you've extended a formal offer. A typical formula is:
Number of offers accepted divided by number of offers extended = offer acceptance rate
Turning down a job offer is more common than you might believe, making this a critical metric. Career Plug finds that some 58% of job seekers have rejected a job offer due to their impression of an employer during the recruitment process. The top reason was a negative experience during the interview stage.
A low acceptance rate will spotlight any glaring problems in your approach to engaging high-quality candidates, allowing you to take action and seal the deal.
8. Application completion rate
The number of candidates who begin to fill out an application for an open vacancy at your company and then submit it is known as your application completion rate.
A formula you can use is:
Number of submitted applications divided by the total number of candidates who started an application = application completion rate
This metric is most useful when combined with other recruitment analytics, such as career site page views or bounce rate. Drop-offs are normal, but if you're not receiving enough applications or spot a downward trend, you might investigate what's turning candidates off. Your questions may be too lengthy or not engaging, or your application form could have a bug that needs fixing.
Remember: although this metric is helpful, it's more important to focus on the quality of applications rather than quantity.
9. Quality of hire
There's no one-size-fits-all approach to measuring the quality of hire—it's highly subjective. What one company considers a top-calibre employee could differ significantly from another, even within the same industry. But even so, 40% of companies believe that quality of hire is the most important metric in the game.
The aim of measuring the quality of hire is to support your future recruitment efforts. If you're happy with the output, productivity, and skill set of Employee A, then you'll want to understand what worked well during the recruitment process. From here, you can tailor your processes to look for similar traits in future applicants.
The better you understand what makes a good candidate, the better your chances of predicting job success in future recruitment efforts.
Some ways to measure quality of hire include:
- Performance review scores
- Development progress scores
- Retention rates
- Client satisfaction
Achieve a higher ROI from your recruiting software
Deciding which recruitment software metrics to track is far from an exact science. Too much data can be overwhelming, so we'd urge you to track meaningful results for you and your business.
If you're looking for a platform that will deliver insightful analytics in real-time, while tracking candidate engagement, and staying on top of key milestones, check out Applied. Our customers benefit from the following:
- 4 x increase in the ethnic diversity of candidates
- 3 x as many suitable candidates
- 93% retention rate after one year
- 9/10 average candidate experience
- Traditional hiring would miss 60% of Applied hires
Now, that's what we call a return on investment.
Applied is the top platform for fairer hiring. Purpose-built for skills-based, ethical recruitment, our software uses anonymisation techniques and skills testing to pinpoint the best talent in the industry.
Ditch conventional hiring wisdom in favour of recruitment software that delivers a higher ROI: book in a demo.
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