How to Calculate and Maximize Your Recruitment ROI

recruitment roi

One of the things a business owner must learn in order to ensure profitability is learning how to calculate and maximize their recruitment ROI. When recruiting talents, businesses need to make sure that they don’t just get the best people onboard, but that they are also recruiting their best talents in a cost-effective manner.

Recruitment ROI is simply the return on investment businesses get from their hiring process. It measures the cost of recruitment and the cost of retaining the employee versus the employee’s efficiency and profitability (lifetime value).

Calculating and knowing the ROI of recruitment help companies make well-informed decisions and produce the best outcome possible for the business. Knowing the overall ROI from recruitment helps improve efficiency in the hiring process and enhance the quality of talents recruited and onboarded.

What is the formula to calculate recruitment ROI?

To calculate the recruitment ROI, one must follow this formula:

[A worker’s lifetime value (greater team productivity, greater profit, increased revenue, etc.)] / [the expenses to hire a worker] + [the expenses to retain a worker].

Let’s discuss each component in the formula.

A worker’s lifetime value

When considering a worker’s lifetime value, one must calculate the overall contribution that the worker will make to a company during his or her entire stay. This includes various aspects such as greater team productivity, enhanced profitability, the revenue growth generated from his or her work, growth potential, and other measurable impacts they have had on the business’ success.

These metrics that helped companies achieve their business goals must be calculated and examined. These metrics can be used to determine the value that each worker brings during their entire stay in the company.

Expenses to hire a worker

The expenses to recruit a worker usually include all the costs associated with attracting, screening, selecting, interviewing, hiring, and onboarding a new worker. A few examples of these are the costs for job postings, fees for a recruitment agency, background checks, and job interview expenses. Basically, all of the expenses that a company spends during its entire recruitment process must be considered here.

By tracking and calculating all of this spending, businesses can accurately have a complete understanding of the needed investment in order for them to get new talent.

Expenses to retain a worker

Next, a company should determine the expenses needed to keep an employee in their organization. This often includes the costs related to maintaining and fostering their involvement and satisfaction with their place of employment. Some examples of these are employee initiatives, development and training programs, worker benefits, competitive compensation, and whatever else a company pays for in order to retain and nurture its current workforce.

These things are important because they contribute to the general investment it has made for each of its workers.

By calculating the recruitment ROI, business owners can have a better idea of how well their hiring efforts are performing.

Key Metrics to Measure Recruitment ROI

Time to fill

Time-to-fill is a metric that reveals the efficiency of the hiring process. A shorter time-to-fill indicates that the process for recruitment is streamlined and efficient.


Businesses can identify areas where they are overspending when they break down the costs involved in hiring.

Quality of Hire

This can be assessed by scrutinizing the performance and contribution of new hires.

Offer Acceptance Rate

Higher offer acceptance rate means that the company is able to make compelling offers to qualified candidates. A survey from Bankrate reveals that employees value their work when they are offered flexibility and high pay.

Cost of Early Attrition

Employees leaving too soon hurts the business and it is very costly. Businesses should understand the reasons why employees leave too soon and how they can filter candidates that will potentially leave the company too soon.

Ways to maximize a recruitment ROI

There are a few things companies can do to maximize their recruitment ROI. Here are a few examples:

Going remote

One of the ways business owners can improve their recruitment ROI is by doing the hiring process remotely. Thanks to the recent developments in technology, employers and job applicants can remotely perform various tasks to conclude recruitment. From screening to interviewing, recruiters could perform all of these tasks no matter where the candidates are located.

As a result, a reduced hiring cost is to be expected, especially since there would be a large decrease in manual intervention. Going remote is an effective talent acquisition strategy that can benefit the business as a whole.

Reusing the data of previous candidates

More often than not, most candidates don’t actually get hired. After all, companies are looking to employ the best person who applied for a specific position. Now, it would be such a waste if business owners were to discard the recruitment data they already have.

Instead of having to go through the hiring process from the very beginning–having to attract talent, they could simply pull data from previous candidates. If they were to successfully hire from there, they could avoid paying for job postings.

Automating manual tasks

Recruiters should definitely take advantage of the available technology they have access to. Instead of manually partaking in menial processes, they should automate things like screening resumes, gathering candidate information, and setting up interviews, among others. Doing all of these would not only save the company time and money but also allow recruiters to better acquaint themselves with the possible hires.

Standardizing and automating the recruitment process can also lead to a high-quality and more accurate applicant assessment, which may result in getting rid of unconscious bias.

Recruiters should also maximize the use of tools and software specifically made to make the recruitment process smoother and more efficient. Structuring and aligning the interviews with the company’s objectives can also result in a more efficient screening process.

Improving the candidates’ experience

Candidate experience is often overlooked and forgotten, however, its improvement can be beneficial in improving the ROI of recruitment.

Business owners could make their hiring process candidate-friendly by not requiring applicants to fill out numerous forms as well as minimizing calls and emails they needed to answer. Essentially, shortening the entire recruitment process would both benefit the employer and the candidates.

When interviewing people, they look at whether the branding and the culture represented by the company through its social media channels are consistent with what their experience during the hiring process. Make sure that your recruiters and hiring managers are representing the company to the best of their ability.

Predict performance

Predicting a candidate’s performance can ensure that the right people get hired. Recruiters could determine this data by performing assessments, such as asking applicants to do a work sample test or undergo psychometric assessments. While they carry out these tasks, employers could observe how they go about it.

Another way to determine work performance is by testing an applicant’s overall mental ability and character. The results of these tests could help hiring managers with their selection.

Investing in workforce retention

Enhancing the whole recruitment process would not be enough if companies want to maximize their recruitment ROI, they must also change the other aspects that affect their workforce retention. One way they can do this is by improving their employee experience.

Business owners could entice their employees to stay longer in their organization by investing in continuous learning and development to help them increase their performance level and overall productivity. Most of the time, employees leave their place of employment because they don’t experience career growth. By providing current employees with opportunities for growth, they would be less likely to look for a job elsewhere.

Outsource the recruitment process

Outsourcing the whole recruitment process can be beneficial for organizations that are scaling their operations. Partnering with an agency like TalentHero ensures you are partnered with a global talent that will help you reach your business goals. We are a global talent firm that specializes in recruitment solutions.

When outsourcing the recruitment process, we implement a screening process that mitigates financial risks, ensuring that you’re presented with only the most qualified individuals.

Allow employees to pursue personal values

Employees appreciate companies that allow them to pursue personal values they find essential. Hence, even if they aren’t completely work-related, it’s vital for companies to offer their workers work-life balance, lenient leave policies, and casual dress codes.


Learning how to calculate the recruitment ROI is important in running a business. Companies could improve their recruitment ROI in many ways. They should not only enhance their entire recruitment process but also improve their systems for employee retention.

Do you have any questions about TalentHero and our key services? Send your queries to [email protected] today.

Author Bio

Oliver Lewis

Founder & CEO

Oliver is an entrepreneur and global recruiter with over 15 years experience – owning, training, managing and growing a recruitment businesses in Europe and South East Asia. He successfully built RPO teams for the UK, Europe, Singapore, Hong Kong, Japan, Australia, Canada, and the USA. He’s managed to grow a start up from 2 employees to 600+ employees.

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