Measuring ROI is always somewhat tricky, but it becomes even more difficult when trying to determine the return associated with recruitment tools. These solutions might seem like they’re streamlining things on the surface, but you may still be questioning how to quantify its effectiveness — and rightfully so. Some tools are iterative and others are transformative.
Part of the mystery falls on the recruiting industry itself. In sales, you can gauge the value of software by tracking the new opportunities it adds to the pipeline or the number of converted leads. But neither of these measures properly evaluates how effective a recruitment tool is. More candidates coming through your doors doesn’t necessarily equate to solid return.
With recruiting tools, it can take time to determine the true quality of new hires. It can take time to move the needle when it comes to retention rates. Perhaps with the exception of cost per hire, it can take time to see a real return. Consistent and measurable results will soon take shape and you’ll likely see that change in much less time if you’re working with AI-powered recruitment tools. Because AI recruitment tools are built to analyze and replicate successful results then provide recruiters with that analysis and strategy moving forward.
But, more than anything, the true ROI of AI recruitment tools is the flexibility they provide.
What is ROI in Recruitment?
Beyond flexibility, a number of other benefits stem from new recruitment technology — some can be quantified, but others are harder to measure. Be patient, but monitor these following items as you create your ultimate recruitment ROI formula:
1. Quality of Candidates
Of all the metrics associated with the ROI of recruitment tools, quality of candidates tops the list. Quality can be subjective, of course. It can depend on the role and company, but you’re generally looking for people who have practical skills, industry knowledge, and a strong work ethic that would excel in this specific role.
Beyond that, an ideal hire will be a team player, a good communicator, self-motivated, and skilled in problem-solving. If you see an uptick in applicants matching your criteria for a role, and being interested, consider it a strong indication of a return on investment.
2. Improved Diversity
There have been some instances of AI recruiting bias. Just last year, Amazon had to scrap its AI recruiting tool because it showed favoritism toward men. In large part, AI can stop confirmation and other unconscious biases in recruiting.
AI has the ability to see through instances of bias where hiring managers might ask different questions to different candidates to confirm their beliefs on who should get the job. Whether AI removes bias and promotes diversity is often contingent upon how the system is trained and how often you’re monitoring its results (your vendor should be doing this consistently).
3. Data-Driven Decisions
Intuition has long been considered an essential skill in recruiting. It still is. Strong feelings about candidates can certainly pay off, but there’s a certain amount of luck in that equation. With AI, however, decisions are driven purely by data and not intuition alone, giving humans a lot more to take into account before their decision is made.
Analytics can help track, measure, and evaluate candidate data and hiring decisions. AI can also alert you to any potential barriers within the recruitment process, which can then be removed before they become serious problems.
Needless to say, your recruitment ROI formula will be different than those of direct competitors. As long as you see a higher quality of candidates, a wider range of applicants, and can start making more informed talent decisions, you can rest assured that your choice of AI recruitment tools was a good one.