How to Calculate the ROI of Employer Branding: Intro

By John Beyer  |  July 25, 2018

measure roi

We know employer branding is important, but how do we calculate its value?

Of all the questions we hear from our customers, this may be the most common. Recruiters understand the importance of employer branding, but clearly defining return on investment (ROI) is a feat that still eludes many teams. After spending countless hours speaking with our customers and analyzing our own process and results, we came to one very clear conclusion - there is no universal answer. But this doesn’t mean calculating the ROI of your employer branding projects is impossible.

Rather than utilizing an imperfect one-size-fits-all approach, we focused on defining the ROI of employer branding on a more granular level, applying the calculation to some common recruiting KPIs. It requires a little more effort, but we found the results deliver accurate and actionable insights when properly implemented.

In this series, we’ll walk you through our approach, and help you understand how your employer branding efforts are adding tangible organizational value. Let’s start at the beginning.

 

What is return on investment?

In the simplest terms, return on investment is a calculation used to determine the profitability of an investment. In our case, that investment is the cost of an employer branding project, and the profit is the financial value realized by optimizing relevant recruiting metrics. For the sake of this series, we’ll define ROI as:

ROI = [(Financial value – Project cost) / Project cost] x 100

Now that we’re all working from the same playbook, let’s review the information you’ll need to gather before any calculations can be made.

 

Set your objectives

In a perfect world, you would have determined your objectives before executing an employer branding initiative, but if that’s not the case, now is the time to determine the metrics your employer branding efforts will be designed to improve. Some of the most common employer branding objectives include:

  • Increasing the number of qualified candidates
  • Reducing time-to-hire.
  • Reducing cost-of-hire
  • Improving quality-of-hire
  • Boosting new-hire retention

There’s no wrong answer here. What matters most is identifying the metric or metrics the organization is seeking to improve upon and developing a plan to track and measure performance over time.

 

Determine benchmark performance

Next, you’ll need to develop an understanding of your historical performance as it relates to your employer branding objectives. It will be impossible to accurately measure the efficacy of your employer branding efforts without some frame of reference, and benchmark numbers provide just that.

The ease with which you’ll be able to calculate historical performance will vary, but if you utilize an ATS in your recruiting efforts, start there. Most ATS platforms allow you to track a host of recruiting analytics, so log in and see what you have access to. If you don’t utilize an ATS, ask around the office and you’ll likely find a wealth of data warehoused in individual spreadsheets.

If you find yourself in the worst case scenario of having no data, calculating the ROI of your employer branding efforts will be more difficult, but not impossible. The most important thing you can do is to begin tracking immediately. Adopting a culture of measurement and optimization will be critical to maximizing the ROI of your employer brand.

 

Account for your costs

Now that you’ve set your objectives and developed some benchmark numbers to compare against, it’s time to calculate your costs. This is a relatively straightforward process, but it’s important that you account for all of your employer branding efforts. Some of the most common costs include:

  • Employee Time - It’s easy to view the time your employees dedicate to employer branding as a sunk cost, but every minute they spend focusing on this area is a minute they aren’t focusing on their core responsibilities and must be accounted for. Calculating the hourly rate of your employees working on employer branding will help determine your total investment.
  • Production - As you give life to your employer brand, you’re bound to rack up some production expenses. Did you purchase a new URL for a dedicated culture blog? Maybe your designers needed new software to create your careers page? Make sure to account for these expenses in your calculations.
  • Third-Party Expenses - In some cases, you may partner with a third party for your employer branding needs. From web development to content creation, there are many services a third-party agency can offer that will benefit your work. Once again, make sure these figures are tallied with your ROI calculation.

No one likes homework, but once you’ve collected the necessary information you’ll be equipped to effectively measure the ROI of your employer branding efforts. Think of it as a small amount of work that will lead to a big payoff. Once you’ve finished, make sure to check back next week as we apply our formula to the first of several common recruiting metrics.

Check out the second post in this series here.

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