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Recruitment ROI Calculator
What is recruitment ROI?
Recruitment ROI (Return on Investment) measures the financial return of your hiring efforts to determine their cost-efficiency. Monitoring your recruitment ROI can help you streamline your recruitment strategies to make them more financially sustainable.
Relevant channels: Hiring platforms, job boards, talent acquisition agencies, and company recruitment teams.
How to use this recruitment ROI calculator
To calculate your recruitment ROI, enter the following data:
- Value of Hires: The overall financial value that the newly hired employees are expected to generate. This may include expected sales or revenue contributions or increased efficiency.
- Advertising Costs: The costs incurred for job postings and advertisements.
- Recruiter Costs: The salary or fees paid to recruiters or recruitment agencies.
- Interview Costs: Costs associated with interviews, including time spent and any additional expenses.
- Onboarding Costs: Expenses related to onboarding and training new employees.
Once you enter the data, the tool will instantly calculate your recruitment ROI as a percentage.
Recruitment ROI formula
Recruitment ROI (%) = (Value of Hires – Recruitment Costs) / Recruitment Costs × 100
The recruitment costs are calculated as follows:
Recruitment Costs = Advertising Costs + Recruiter Costs + Interview Costs + Onboarding Costs
Understanding the recruitment ROI result
The ideal recruitment ROI will depend on factors such as your industry, targets, the type of role for which you recruited employees, and so on. In general,
- A high recruitment ROI indicates that the value created by your hires is much greater than the cost of recruitment, indicating that your hiring strategy is effective.
- A low or negative recruitment ROI means that recruitment costs are significantly high or outweigh the value of the hires, signaling the need for improvements in the process.
When to calculate recruitment ROI
After completing a recruitment cycle to analyze its cost-effectiveness.
Before implementing new recruitment strategies or tools.
Periodically, to assess and optimize recruitment and hiring processes.
How to calculate recruitment ROI (with example)
Imagine that you hired employees with the following recruitment-related costs:
Value of Hires: $100,000
Advertising Costs: $5,000
Recruiter Costs: $10,000
Interview Costs: $2,000
Onboarding Costs: $3,000
Your recruitment ROI will be calculated as follows:
Recruitment ROI (%) = (Value of Hires – Recruitment Costs) / Recruitment Costs × 100
Recruitment Costs = $5,000 + $10,000 + $2,000 + $3,000 = $20,000
Recruitment ROI = ($100,000 – $20,000) / $20,000 × 100 = 400%
In this case, your recruitment ROI is 400%, meaning the value of the hires is four times the cost of recruiting them, indicating a highly efficient hiring process.
How to improve your recruitment ROI
Optimize your job posting strategy by focusing on the most effective channels, reducing the need for widespread advertising.
Use technology, such as AI recruiting tools, to speed up the hiring process
Enhance your onboarding processes to minimize onboarding costs while maximizing the value of hires.
Use employee referrals and internal recruitment programs to lower external recruiter costs and speed up hiring.
Aim to recruit candidates with a high retention rate, reducing the need for frequent rehiring and associated costs.
Use data and recruitment analytics to optimize your hiring process, ensuring you bring in the most valuable candidates.
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