October 18, 2017

Defining Your ROI: The Key to Solving a Recruiting Problem You Didn’t Know You Had

Nicole McKeon
October 18, 2017

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“Return on investment.”

This phrase often hangs over the head of a Talent Acquisition Director like the sword of Damocles, as pressure from the CFO looms in the distance. In job advertising—and recruiting in general—making decisions about where to invest your budget can be daunting, and it’s easy to be unsure of what strategy to take or where to begin allocating your spend. With all the job advertising options available to recruiters…from a variety of major job boards, aggregators, niche sites, and consumer sites…how are you supposed to know which sources will deliver you an ROI, and gain confidence in what that ‘return’ will (or should) look like?

Defining Your ROI

In any business, in order to set goals on driving an ROI from your spend, you must first decide how you define and measure ROI in your organization. In recruiting, this story is no different. With all the sourcing activities recruiters use, the term “ROI” is meaningless without an agreed upon way of measuring it consistently and setting benchmarks of what you look to achieve as an organization. Without a defined process, “ROI” becomes a discrete term that’s merely talked about and never used as a metric to help evaluate your sourcing performance.

There is not one singular definition or benchmark for ROI that recruiting organizations should follow – each has their own set of goals and budgets. However, when advertising jobs, an example of a popular benchmark I’ve seen recruiters use when evaluating their ROI is the number of applicants they receive compared to the number of hires they end up making. Simply put, they add up the total number of applications received for a job, and divide that by the number of hires actually made. This helps a recruiting team understand a benchmark for the number of applications they need to drive at the job-level in order to generate an actual hire.

By using this definition, once you have a determinant benchmark set on the number of applies it takes to generate a hire, here’s how you can set up your recruiting systems and operation in order to continually track the benchmark during all of your sourcing efforts:

  • Integrate your applicant tracking system with a job advertising vendor or recruitment marketing platform to get automated, detailed analytics on your applicant sources. This allows you to collect data and understand which sources are high or low performers of applicants based on your levels of advertising spend. With some integrations, you can also measure source performance all the way through making that ultimate hire.
  • Track this metric across all of your requisitions in order to understand a benchmark or average. Evaluate it over time depending on the job function and your levels of job advertising spend.
  • Over time, continue to refine and optimize your recruitment advertising strategy to generate better ROI results. Your goal is to increase the conversion ratio by decreasing the number of applies it takes to generate a hire.

Here’s the punchline: by knowing how many applicants you need to fill any given position, you can spend your precious budget more efficiently by eliminating unnecessary spend on jobs that have enough applications and putting focus on sponsoring only the ones that need more. Building your job advertising strategy around this framework will save you time and budget and generate a better ROI for your organization. The strategy is a virtuous circle, and thankfully, it works.


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