CALCULATE INVESTMENT RETURN ON ASSESSMENTS

The ROI (return on investment) from using TestGorilla is calculated by taking the total amount of money you can save using skills-based hiring, subtracting the cost of the relevant plan, dividing this number by the plan's cost, and multiplying it by 100. This gives you the ROI expressed as a percentage.

ROI (Return on investment) in recruitment is a metric that compares the financial benefits of your recruitment efforts against the costs involved. Put simply, it measures the value of an employee to the company against the money spent by the employer to hire and retain that employee.

Although this calculation might seem simple, recruitment ROI can be quite complex to determine because the financial benefits can manifest in various ways. These include increased productivity driven by better quality hires, lower recruitment costs due to faster and more efficient hiring processes, and fewer mis-hires.

Read more about setting a recruitment budget

For recruitment ROI calculation, you need to determine the lifetime value of an employee and divide that by the cost of hiring and retaining that employee. The lifetime value of an employee can include factors such as increased productivity, increased revenue, and reduced turnover, while the total cost of hiring and retaining an employee could include job advertising, recruitment tools, and software, salaries, bonuses, and benefits packages.

Read more about calculating hiring costs

The recruitment success rate is a metric used to measure the quality of hires coming from your recruitment efforts. It’s calculated by dividing the number of candidates who perform well by the total number of candidates hired. Candidates who meet or exceed expectations within the first year of employment are generally considered successful hires, whereas the opposite holds true for candidates who fall short of expectations.

Read more about employee retention rates

Some of the most common metrics that are used to measure recruitment performance are Time-to-hire: time taken to fill an open role.

Cost-per-hire: cost-to-company to fill an open role.

Quality-of-hire: percentage of new hires who meet or exceed expectations in their role within their first year.

Quality of candidates: Number of candidates interviewed who were high enough caliber to be considered for an offer.

Retention rate: number of employees who leave within the first year.

Read more about recruitment KPIs

To maximize your ROI on recruitment, your main focus should be improving your hires' quality. Having said that, if you can reduce your time-to-hire and minimize recruitment costs without harming the quality of hires, this can also be beneficial to your ROI on recruitment. A few ways to achieve this include using data-driven recruitment strategies, leveraging technology and automation, and implementing pre-employment testing to assess candidates’ skills and job fit.

Read how skills-based hiring impacts recruitment costs

Pre-employment testing has a proven track record of maximizing recruitment ROI and hiring the best. The hiring process is faster and more streamlined than traditional recruitment methods, and candidates hired using pre-employment testing are more likely to succeed in their jobs and stay at the company for longer.

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