How to Determine ROI of a New Employee

Creating and hiring for a new role usually requires some research. It’s not enough to ask leadership and HR to list a position without being able to justify the cost of the recruitment process and a new employee salary. Being able to demonstrate how an employee will benefit your business – and how that benefit will outweigh the costs of bringing them onboard – can go a long way in helping you make your case and get the help you or your team need to be successful.  So, how can you effectively show the return on investment of a new hire?

  1. Show you’ve considered all costs. Everything has a cost – recruiting on job boards, onboarding, training materials. If you can show that you’ve accounted for all of the relevant hiring costs, you can show you’ve done the math and there is still both a need to hire and value in bringing on a new employee.
  2. Demonstrate where you can save costs. If you can communicate where you’ll be able to save, you can gain more support for your hiring initiative. Can current employees take on some of the training without losing productivity? Have you identified qualities in a candidate that would allow them to start making an impact earlier than other hires might? Think about the ways you could save the business during hiring.
  3. Calculate impact. Even if your new hire won’t make a direct impact on the bottom line of your business, you can demonstrate value in other ways. Will they be working in a customer-facing position, helping to boost the reputation of your brand, ultimately helping to drive more revenue? Will they support the sales team to keep profits high? Will they keep your employees productive through IT support? The ROI on an employee can be more intangible than direct profit generation, but should still demonstrate real, measurable value. Strong employee ROI comes from high employee engagement, no matter what task they’re engaged in, so companies that support a positive culture, good training practices, and thorough hiring are already ahead of the game in getting a return on investment in their workforce.

The biggest ROI in hiring? Finding the right fit faster. Getting the best possible candidate hired means they can start contributing immediately and will likely stay on board longer, driving down recruitment costs for that particular employee.

We can help you connect with your next best hire. Contact us today for help creating the best team for your business.

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