ROI: How do We Measure The Effectiveness of Recruitment at Talent2Win?
For a company, a recruitment process can be expensive, nevertheless it is an important investment. The cost of hiring a new employee can be high, therefore, it is important to analyze whether this initial investment could be profitable. And this is where recruitment metrics come in.
The Talent Acquisition methodology performed by Talent2Win is highly effective in terms of return on investment (ROI). Delivering candidates that prove to be a right fit is the result of an exhaustive and carefully designed strategy.
Why Measure ROI in HR?
As in any other field, knowing the return on investment in Human Resources allows companies to make smarter investments, while managing resources effectively. By identifying the most effective Talent Acquisition strategies they can determine where to assign resources and carry on the efforts.
In order to make the right choices, business leaders should know how their companies work and everything related to their human capital such as performance, productivity, absenteeism, turnover, among others. Analyzing these ROI metrics will allow them to know the needs of their selection processes and the best means to fulfill them.
How to Calculate ROI in Recruitment?
A Talent Acquisition process follows a well defined plan to achieve the goals set. For it to be considered effective, there are some KPIs recruiters must consider to evaluate recruitment ROI. In Human Resources, the most important KPIs are:
- Time to fill
- Time to hire
- First year attrition/short term turnover
- Cost per hire
- Time to productivity
- Employee tenure
- Turnover and retention rates
- New hire performance
These KPIs can be set by company leaders or HR heads in order to focus on what is most important to the organization. Calculating return on investment metrics is the best way to evaluate how the business is managing this process and get to know the cost per hire as well as how it is related to the company profitability.
Effective ROI Metrics to Assess Recruitment Performance
Talent2Win understands the value of your investment. Your company will see great results on the most important recruitment metrics:
- Time to fill. It measures the time it takes to incorporate a new hire. This metric reveals the efficiency of the sourcing channels used and the Talent Acquisition process.
- Time to hire. Although it may seem similar to time to fill, this KPI measures the time from the moment your eventual hire entered your talent pipeline to the moment they accepted the job offer.
- First Year attrition/Short term turnover. Both concepts refer to an employee leaving the company. These metrics are important because an effective Talent Acquisition process should bring new employees that want to stay in the company in the long term. It is important to know firsthand the turnover rate in order to attract candidate profiles that can justify the investment.
- Cost per hire. This may be the most important indicator when calculating the cost of the investment and it shows the sum of a single employee’s hiring costs.
- Time to productivity. It measures the time it takes a new employee to contribute to an organization.
- Onboarding. Besides being considered in the sum of the Talent Acquisition process costs, this metric has a great importance in the retention of the new talent.
- Retention. For a new hire, it measures the willingness to stay within the organization. A way to find out is the level of satisfaction shown by the employees.
Wise HR Managers balance these metrics against one another: a quick hire, low-cost, with poor performance that quits early will definitely become a loss in ROI. Taking a tailored approach is especially useful if you need to get executive buy-in for recruitment budgets.
At Talent2Win, we measure Talent Acquisition effectiveness by analyzing if the process is performed on time, on budget (without any additional expenses) and has no early turnover.
Why is it Important to Have a Budget?
Talent Acquisition investments may seem pricey but the ROI is much more valuable when performed correctly without shortcuts. Having a strong Talent Acquisition budget helps achieve your organization’s business goals.
Doing so can lead to finding valuable talent that is, otherwise, hidden in a talent pool. This way there is a bigger chance to hire better candidates whose profiles will make a positive impact on the company.
In addition, delegating hiring to experts can make the recruitment cycles much more effective in terms of time and money. As a Talent Acquisition startup, Talent2Win has the tools to calculate the rate of return in order to achieve the desired results more quickly and efficiently.
It is best to invest on high quality recruitment to get valuable, talented employees. A bad hire can have a negative impact both on the company and on the workforce. At the end of the day, a bad choice could mean a loss of the resources invested.
Using recruiter analytics and setting the correct KPIs is the best way to make a good ROI on the Talent Acquisition process for your business. Investing efforts and resources in such an important matter can have a direct impact on profitability, and at Talent2Win we can help you achieve that.