Hiring someone new is no small expense for a company. The cost of recruiting, interviewing, vetting, and training a new hire can be as much as the employee’s annual salary or more. Being able to gauge whether or not the new team member is paying off is a valuable metric to have. Here is how to measure the ROI of your new hire.
Have a Clear Role in Mind
Before you begin to try and calculate the ROI of your new team member, you should have a clear idea of what their role is and what they should be accomplishing. Without clearly defining the role, responsibilities, and expectations, you won’t be able to calculate a benefit to bringing them on board.
Additionally, employees who take on jobs where their roles are not clearly defined tend to underperform, making them a bad new hire. This can also hurt the morale of your other employees and even make it harder to find quality candidates in the future.
Choose a Measurement
This is the first step in measuring the ROI of anything. You need to decide what you are going to measure to determine success. Will you be monitoring growth or sales? Is the new hire supposed to free up time for someone else on the team? As mentioned above, knowing exactly what you want them to accomplish in their role is important to measure the ROI.
When it comes to measuring the ROI of your new hire, using a cost-benefit analysis is typically a good idea. To do this, calculate the cost of hiring them. This includes the time spent recruiting, interviewing, and training them. Then quantify the benefit you expect to see. For instance, will sales increase by bringing them on board?
Include All of the Costs
When you are determining the costs of a new hire, be sure to tabulate all of the costs associated with bringing someone new to the team. There are both obvious costs, such as salary and benefits, and hidden costs. Hidden costs include things like how much time is spent on the hiring process and the length of time training takes.
The hiring process cost should include the in-person hours used to formulate a job description, posting the job, sifting through candidates, interviewing, and vetting potential employees. It should also include the amount of time it takes to onboard and train the new employee. Until onboarding and training are completed effectively, the new hire won’t be at their peak performance level. This is also another hidden cost to take into consideration.
Why New Hire ROI is Important
Because hiring someone new is oftentimes expensive, knowing the return on your investment is important. You should be able to clearly define what you want your new employee to do, how to measure success in the role and quantify the benefit of bringing them on board.
One of the best ways to decrease the cost of your recruiting efforts is hiring professionals like the Staffing Resource Group. Contact us to see how our team can help you with your hiring needs.