ROI recruitment calculator
Including pre-employment assessments in your recruitment process is proven to have a dramatic impact both on your company’s performance and your candidates’ experience. Use our hiring ROI calculator to learn how much time and money you can save with TestGorilla assessments. Try it for free now!
Recruitment ROI: how TestGorilla helps you achieve better returns on your recruitment efforts
*Actual results may vary. Learn more about how we calculate these results.
How we calculate ROI from using TestGorilla
ROI from a reduction in time-to-hire:
Reduction in time-to-hire is calculated by taking your current time-to-hire and subtracting the estimated time-to-hire using TestGorilla. Studies show that when using traditional recruitment methods, time-to-hire is up to 50% higher than when using skills-based hiring.
ROI from a reduction in voluntary turn-over / miss-hires:
Reduction in voluntary turnover is calculated by taking your current turnover rate and subtracting the estimated voluntary turnover rate you would have using TestGorilla. TestGorilla’s voluntary turnover validation study shows a 56% reduction in voluntary turnover when candidates are hired using skills-based hiring.
Money saved by a reduction in voluntary turn-over/miss-hires:
The U.S department of labor estimates that the cost of a mis-hire is up to 30% of the annual salary of the employee. To calculate the money saved by the reduction in turnover, we take 30% of your company’s average annual salary and multiply it by the number of employees you plan to hire in the next 12 months, and your current turnover rate. We then use the estimated 56% reduction in mis-hires (as reported in our 2022 SBHR) to calculate the cost of voluntary turnover in companies using skills-based hiring and subtract that number from the original to calculate potential savings.
ROI from saving time on screening applicants:
Time savings on applicant screening is calculated by multiplying the number of candidates that apply to your open positions (we’ll use an average of 250 if the number has not been filled in) by the time that it takes to screen each resume and the number of employees planned to hire in the next 12 months. We then calculate this number accounting for the 90% reduction in time from using TestGorilla and calculate the difference between them.
ROI from saving money on screening applicants:
Savings on applicant screening are calculated by multiplying the number of candidates that apply for open positions (we’ll use an average of 250 if you don’t provide us with a number) by the time that it takes to screen each resume, the number of employees planned to hire in the next 12 months and the average HR hourly wage. This result is then multiplied by 90% (the amount of time you can save by screening applicants with TestGorilla) and subtracted from the first number.
Total time saved from using TestGorilla:
One of the best ways to improve your recruitment costs and your ROI on recruitment is to save time. To calculate the total time saved using TestGorilla, we take the average time invested in screening, interviewing, and getting work samples from a candidate and multiply this by the number of employees that you are looking to hire in the next 12 months. We then do the same calculations, factoring in the 39% reduction in time to hire from using TestGorilla, and calculated the difference between them.
Total money saved from using TestGorilla:
The old adage time is money still holds true today, so much so, that we used the time saved to directly calculate the potential money saved from using TestGorilla. To calculate the total potential saving from adding TestGorilla to your recruitment process, we took the average cost of screening, interviewing, and getting work samples from a candidate and multiplied it by the number of employees that you are looking to hire in the next 12 months. We then do the same calculations, factoring in the 39% reduction in costs from using TestGorilla and calculated the difference between them.
ROI from using TestGorilla
The ROI (return on investment) from using TestGorilla is calculated by taking the total amount of money that you can save using skills-based hiring, subtracting the cost of the plan, dividing this number by the cost of the plan, and multiplying it by 100. This will give 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, ROI in recruitment measures the value of an employee to the company against the money spent by the employer to hire and retain that employee. Although it might seem simple, ROI in recruitment can be quite complex to calculate 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.
To calculate the ROI for recruitment, you need to calculate 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.
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 hired 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.
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.
To maximize your ROI on recruitment, your main focus should be on improving the quality of your hires. 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.
Pre-employment testing has a proven track record of maximizing ROI on recruitment and hiring the best. Not only is the hiring process faster and more streamlined than traditional recruitment methods, but candidates hired using pre-employment testing has a better likelihood of succeeding in their jobs and staying at the company for longer.