How to Evaluate ROI When Investing in Recruitment Software

6 mins read

If you want to justify your recruitment software investment to management, you must know how to evaluate ROI. A few key numbers to consider include cost-per-hire, time-to-hire, and quality-of-hire.

The best way to calculate recruitment ROI is by weighing the value of an employee against their costs. Tracking these metrics can improve your recruiting process and maximize its impact on your organization.


Cost-per-hire is a crucial indicator of recruitment efficiency and effectiveness. It is a combination of internal and external costs related to recruiting, including job ads, salaries for new hires, and hiring managers’ salaries. It also includes the time it takes to identify and shortlist candidates and interview them. Using an ATS can help you reduce these costs.

Ideally, your goal should be to achieve the highest return on investment possible. This means that the net benefits of new hires should exceed your total costs. These benefits may include improved productivity, increased revenue, or other factors that align with your business goals.

Detailed ROI data can help you identify problem areas in your recruiting process and improve ROI. For example, if your passthrough rate is low, you can invest in strategies such as candidate-centric marketing to attract more quality candidates. This will increase your ROI and improve the candidate experience.


Whether a small business or a large corporation, you must know how much your recruiting efforts cost. This information will help you improve your hiring process and make better decisions about recruitment investments. You’ll need to look at several factors to calculate recruitment ROI.

Some of these metrics are quantifiable, such as time to hire and cost per hire. However, you’ll also need to consider other more subjective metrics, such as first-year attrition rate and employee retention. When considering the adoption of recruitment software for your organization, one crucial aspect to evaluate is the recruitment software pricing, ensuring that the chosen solution aligns with your budget and offers the necessary features to streamline your hiring processes effectively.

To calculate the ROI of recruitment software, you’ll need to take the total costs associated with the recruitment process and divide them by the number of new employees recruited. This includes the cost of advertising, recruiter fees, background checks, and interviewing expenses. The result should be positive, and if you use an ATS, the results should be even more favorable. By cutting out manual processes, ATS software can save up to 50% of your recruiting costs.


The quality-of-hire (QoH) is a vital recruitment metric that indicates how well new employees contribute to company performance. This metric is also used to measure the effectiveness of recruiting processes and identify areas where improvements can be made.

The QoH metric is easy for HR managers to calculate and can help them determine which recruiting strategies work best. For instance, if you find that the highest quality hires come from a particular source, you can make a strong case for investing more in that channel. Conversely, you can only collaborate with an agency that consistently sends low-quality candidates.

Using an applicant tracking system (ATS) can significantly reduce the time and cost of recruiting. It can help you manage all aspects of your talent acquisition process and make hiring decisions more quickly. This can lead to a better ROI on your recruiting investment. Using a simple and intuitive ATS to understand your team members is critical.

Return on investment

A substantial expected return on investment can help persuade decision-makers to invest in recruitment software. The longer a position is open, the more it costs your organization in terms of lost productivity and potential revenue. An ATS can reduce hiring time by streamlining the hiring process and automating tasks. It can also help you avoid costly mistakes by providing data and analytics on the effectiveness of your recruitment methods.

Another critical factor in ROI is cost-per-hire. The experts have created a formula for calculating this figure, which includes all internal and external hiring costs and divides it by the number of hires. An ATS can lower your cost-per-hire by saving you money on external search firms and eliminating manual recruiting processes.

Achieving a high ROI in recruitment can be challenging because many factors are subjective and hard to quantify. By collecting accurate data and aligning it with your organizational goals, you can calculate your recruitment process’s total cost and net benefits.

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