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6 metrics to calculate your applicant tracking system ROI
Metrics like time saved by recruiters and cost per hire can give insight into whether an ATS is delivering ROI. Learn how to measure these KPIs and evaluate success.
Implementing a new applicant tracking system is a major project, and a talent acquisition leader will want to justify the expense with data that demonstrates the ROI of the new system. Certain metrics can help demonstrate that the ATS was a valuable purchase or make clear that there is room for improvement.
Setting measurable targets for success for the ATS at the outset can be helpful down the road. Changes to targets are possible, as long as the reason for the change isn't an attempt to make underperforming software meet expectations. However, adjustments to targets should not be made in the first few months, since it takes time for recruiters, hiring managers and interviewers to get used to the new ATS.
Here are some metrics that can help demonstrate whether an ATS is delivering the expected ROI.
1. Time to fill a position
Time to fill a position is typically measured in days.
Meeting a certain time to fill a position metric isn't solely the responsibility of the recruiter, as other participants in the hiring process may cause delays. For example, a job applicant may not be available right away for an interview, or a hiring manager may take longer than expected to provide feedback about a candidate. Tracking who owns the current step in the process can give more insight into the cause of any delays.
Another consideration when examining the "time to fill a position" metric is the type of position being filled. Entry-level positions may be easier to fill than more senior or more specialized roles. Measuring overall time to fill and then breaking down that number by metrics like department or job level can provide further insight.
2. Time saved by recruiters
Time saved by recruiters is an important measurement because the cost to the HR department is typically the most expensive component of recruiting.
An objective way to measure a recruiter's time spent on a job opening is to track it using timesheets or a spreadsheet. Tracking that data also takes time for recruiters, so recording time spent for a random selection of requisitions may be better than tracking all of them.
3. Quality of AI tools
For years, ATSes have included AI tools that help automate manual recruiting tasks. For example, many ATSes use AI to rank candidates based on the job description and candidates' resumes. However, human employees must review those rankings if the recruitment team decides to use that feature.
When employees review the rankings, they can measure how well AI did at identifying valid candidates.
4. Cost per hire
Tools used in the hiring process besides an ATS include background checks, interface fees, assessments and third-party contracts.
The talent acquisition leader can add up the costs of all the tools to find the cost per workday and then divide the costs by hire to find an average cost per hire.
5. Quality of hire
The quality of hire metric measures the success of the ATS and interviewing process at identifying top candidates.
Data that is often used when calculating this metric is information like whether the hire is still employed after three or six months and how well a new hire did on their performance review.
6. User feedback
Feedback from the recruitment team, hiring managers, interviewers and job candidates can give insight into whether the new ATS is meeting the needs of various stakeholders.
Surveys can simplify the process of gathering that information and can be customized for each type of user.
Eric St-Jean is an independent consultant with a particular focus on HR technology, project management and Microsoft Excel training and automation. He writes about numerous business and technology areas.
