Make Your Advertising Dollars Count: Recruitment ROI Tracking in the Digital Age

“Hear that giant sucking sound? That’s the sound of your money.” ? Ross Perot Way back when, your recruitment spending was one-quarter what it is now. You rarely had to worry about tracking dollars, since the Sunday classifieds were about your only choice save the occasional trade publication ad. It’s just not that simple anymore. Now you’ve got an unemployment rate under 4% (worse in the major markets), thousands of job sites to choose from, and an army of impatient hiring managers practically banging down your door. Not an enviable position, is it? But here’s help: your employment website is not just a place where candidates learn about your company and/or apply for openings. It’s an accountability tool. Used well, it will ensure that you are spending your budget wisely and will help you identify new ways to recruit. Here are some essential steps to uncovering and optimizing your overall Return on Investment (ROI): STEP 1: Get over your fear The first crucial step in the ROI tracking process is to get over the fear of what you’ll find. Chances are it will show your return on investment has been in steady decline for some time. Scary, isn’t it? A number of factors ? including the tight labor market, proliferations of new media opportunities (job sites) and companies (dot-coms), and more specialized/difficult-to-fill disciplines ? have caused just about everyone’s ROI into a steady decline. Tracking your return on investment will allow you to reallocate your budget in the most effective way possible. And it will document your argument to other departments within your company that your spending plan is sound. STEP 2: Use the right tools Most Applicant Tracking Systems allow you to track where the resume flow is coming from by asking candidates on your Online Application. ATS’s also usually allow you to run reports on how each source is doing in terms of candidate flow, resume cost-per-source, and (ideally) cost-per-hire-per-source. If you don’t have an Applicant Tracking System, custom forms can be built into your Employment Website’s Online Application that allow candidates to inform you about where they heard about the opening and/or your company. STEP 3: Ask the right questions ROI Tracking all starts with the application process. Whether through an Applicant Tracking System or a custom application on your site, you’re relying on applicants to tell you how they found you. Whether you use an ATS or not, source tracking must be a required field in your online application for you to get an accurate picture of ROI. If you’re a large or fairly well-known company, chances are that the question “Where did you hear about our company?” won’t result in an accurate response. In addition, vague multiple-choice answers like “Internet” can skew your responses as well. If candidates are on your website, they might be tempted to pick “Internet” when they really heard about your site on the radio or in a newspaper ad. The more specific you get ? with your questions and possible answers ? the better. STEP 4: Compare apples to oranges It’s very easy to get lost in your day-to-day recruiting activities and not take a step back to examine the true overall picture. One big picture detail you won’t want to miss is measuring the ROI on ALL candidate sources ? including advertising, search, retained search, employee referrals and more. Only comparing ROI between advertising and job postings is a micro-recruiting approach. To truly maximize your ROI, you need to closely examine and compare everything. I’ve seen too many organizations that have completely separate budgets for each recruiting-related activity that they can never be optimized because they are never compared. STEP 5: Track quality and quantity Here’s a part of the tracking equation that is very commonly ignored: using quality as a criteria to rate each source of applicants. Let’s look at a somewhat extreme illustration. Company X uses two sources for Software Engineers that have identical costs and response times. “Source A” yielded 1,000 completely unqualified applicants. “Source B” yielded 100 very qualified applicants. If you weren’t measuring quality, your tracking numbers would say that you got 1,000 responses from “Source A,” and you would very likely make the wrong choice when deciding where to spend your budget in the future. Applicant tracking systems are just starting to catch on to this, and many of them will allow you to proactively rank resumes and hires from each source. STEP 6: Add it all up Here’s a very basic Recruitment Return on Investment Comparison Equation that will help you identify what’s causing the “giant sucking sound” in your organization. It will help evaluate and optimize your return on investment in terms of a) Cost per Hire b) Applicant/hire Quality and c) Time to Hire. Customize it to your needs by adding a multiplier to each variable depending on how important it is to your company. An additional variable that can be measured is conversion rate (i.e. of the qualified applicants, what percent from each source are actually hired). I would suggest running this by position type per source if possible, as results for each source will definitely vary by position. Bet you didn’t think you’d use that algebra class you took! ___A___

B + (C-D) A = Source Quality of Applicants (ranked 1-10) B = Source Cost per Hire (in dollars, divided by 1,000) C = Actual Source Time to Hire (in weeks) D = Expected or Average Time to Hire (in weeks) Now here’s the fun part: use this information to your advantage! The higher the number, the better the source. Compare sources by position type; determine which higher return on investment options are viable for positions that are too heavily reliant on low return options; and either reallocate your budget or reeducate your field recruiters on the higher ROI methods of recruiting. <*SPONSORMESSAGE*>

Article Continues Below

Dave Lefkow is currently the CEO of talentspark (, a consulting firm that helps companies use technology to gain a competitive advantage for talent, and a regular contributor to ERE on human capital, technology, and branding related subjects. He is also an international speaker on human capital trends and best practices, having spoken in countries as close as Canada and as far away as Malaysia and Australia. His consulting work has spanned a wide variety of industries and recruiting challenges with companies like Starbucks, Boeing, HP, Microsoft, Expedia, Washington Mutual, Nike and Swedish Medical Center.


Leave a Comment

Your email address will not be published. Required fields are marked *