ROI in technology recruitment: a step-by-step guide

Guest post by Laura Dragulin from our Main Sponsor, yu:talent

Measuring the ROI of your technology can be a Sisyphean labour for most business areas and the recruitment industry is no exception. Considering factors such as productivity, efficiency, customer satisfaction, and how staff react to the technology, the true ROI calculation must consider both quantitative and qualitative variables.

Let’s say you are the owner of a recruitment business, constantly investing in technology. But after a period of testing trends and pouring money into solutions, you want to enjoy the fruits of your investment: to check if the business is demonstrating the expected ROI and if consultants are using the technology properly. You arrive at a crossroads where you have to decide if the technology is fit for purpose or not. We’re tabling a few questions to help you through the process of calculating your ROI and the factors you need to explore.

Firstly, we need to ask the question, what is ROI? In its simplest form, the calculation we need to perform is: (Gain from investment – cost of investment) / (Cost of investment)

Overall, we can say that technology has done wonders for the recruitment industry and gains from investment at first glance seem to be positive. Not only has it allowed job seekers more alternatives to finding their ideal jobs, it also has allowed recruiters to decrease their costs, streamline their hiring process, and increase their efficiency at work.

Secondly, on the other hand, consider that the introduction of new technology is not always a resounding success story. Here are some issues that you may need to factor into your calculation, which may not seem so obvious at first glance.

Perhaps your consultants are hesitant to use it, so your investment ends up being a very expensive dead weight. For instance, you might have this great software that effectively measures the activity and productivity levels of your consultants, but if it’s too complicated or time-consuming to use, then they probably won’t use it – and of course this needs to be considered in the ROI calculation.

Of course, over time, the software that was once fit for purpose may slowly have become obsolete for your current business needs.

Thirdly, consider the more invisible benefits of new technology. Investment in recruitment technology opens up totally new horizons by replacing the “old ways” with a new generation of recruiting tools (social recruiting tools, assessments, Big Data). In addition,  mobile apps. come as a bonus, incorporating mobile learning, recruiting, collaboration, and employee management. And let’s not forget about the analytics – Big Data provides you with an easy way to analyse the job market, recruitment advertising and to define your business goals. All these advantages need to be taken into account when calculating the ROI.

The stakes are certainly high. According to  Josh Bersin (http://www.google.com/url?q=http%3A%2F%2Fwww.forbes.com%2Fsites%2Fjoshbersin%2F2013%2F05%2F23%2Fcorporate-recruitment-transformed-new-breed-of-service-providers%2F&sa=D&sntz=1&usg=AFQjCNGlOQzFf0SVrmussmUQ-zouxXCOdg), US corporations spend nearly $72 billion each year on a variety of recruiting services, staff, and products – and the worldwide figure  is likely to be three times bigger.

Determining the ROI more precisely can be achieved by benchmarking existing processes and determining where the software could provide benefit, and then placing a value on that benefit. If, by implementing the software, a recruitment business can reduce office staff by one person, that has a value. If one process can be improved to gain an hour or even a minute of productivity per day, there is a positive value.

When calculating costs, don’t forget to include the cost of maintenance and training as well as the time that employees need to get up to speed on new ways of working.

Finally, once the software has been implemented, go back and benchmark again to ensure that the anticipated benefits regarding processes and efficiencies have become a reality.

In conclusion, even if your recruitment organization achieves the quantitative ROI regarding technology expenses (clear metrics like reduced personnel, decreased hours spent on pitching talent, etc.), the qualitative data has to make a progressive jump as well, in order to have fully quantifiable results.