Revolutionising Recruitment: The ROI of AI for Australian SMEs

As a business, every cent matters. Whether you’re investing in new products or new marketing efforts, you want your money to be spent well. One big expense for Australian businesses is finding new talent; companies spend an average of $13,545 a year on hiring activities.

It pays to ask, could you hire for less? You certainly can with AI. AI is already revolutionising recruitment in a big way, through Employment Hero’s SmartMatch. By automating the hiring process and proactively sourcing talent suited to your business, SmartMatch is saving businesses time and money. And of course, they’re finding great employees too. 

In our report, we look at the current state of recruitment in Australia, what AI can do for the hiring process and the return on investment that businesses could see with AI-powered tool SmartMatch. After all, hiring top talent doesn’t have to break the bank if done right. 

Download the report by filling in the form on the right.

Understanding recruitment ROI: what does it mean?

Recruitment ROI (Return on Investment) measures the effectiveness and financial impact of your hiring efforts. In short, it checks whether the work and money you’re putting in is worth it. 

A great ROI means that the results you’re seeing far outweigh the time and money you’re putting in. It also means your recruitment strategy is successfully bringing in high-quality candidates who contribute significantly to the business, while keeping costs in check. 

Why is it crucial for HR to monitor recruitment ROI?

No HR team has an unlimited budget and for many businesses, they can’t afford to waste money. It’s critical for HR to monitor recruitment ROI to ensure that the company budget is being spent in the most effective way possible. 

For example, no one wants to splash money on a big recruitment campaign if the candidates that apply don’t even reach double digits. Monitoring ROI will help you pinpoint what’s working and what’s not in your hiring process.

It also allows HR teams to justify their recruitment budget to business leaders by showing them a clear link between spending and the value it generates. 

Step-by-step guide: measuring recruitment ROI

There is no single calculation for recruitment ROI. Instead it usually requires monitoring both the efforts put into hiring and the results, and comparing the two together. This should help you understand if your time and money is going to the right places. 

A few key indicators will help you understand the success of your hiring efforts. Depending on the size of your business and the frequency of your hiring, not all will apply. They include: 

First-year turnover rate

This metric tracks the percentage of new hires who leave the company within their first year. A low turnover rate suggests your hiring process is effective at finding candidates who are a good fit, which is a major win for your ROI.

Job offer acceptance ratio

The ratio of job offers extended versus the number of offers accepted. A high acceptance ratio indicates that your offers are competitive and your company’s reputation as an employer is good.

Application submission rate

This is the percentage of people who start an application and actually complete it. A high submission rate means your application process is user-friendly and not creating unnecessary hurdles for potential candidates.

Apply-to-interview conversion rate

This measures the percentage of applicants who get a chance to interview. A high number of candidates who move to the interview stage shows that your candidate screening process is effectively identifying promising talent.

Time-to-fill

This is the number of days it takes to fill a vacant position. In Australia, this is around 29 days on average. A shorter hiring timeline is often a sign of an efficient recruitment process, which directly impacts costs.

Recruitment-related expenses to consider

When calculating recruitment ROI, you need to be fully across all your expenses related to hiring. Think beyond the obvious costs. Here’s a quick list of what to factor in:

• Advertising fees 
• Agency or recruiter fees
• Background check and screening costs
• Time spent by HR creating ads, reviewing CVs and completing screening interviews
• Time spent by staff on interviews and onboarding
• Employee referral bonuses
• Training and onboarding costs

Figuring out your average cost per hire

While some of the earlier metrics were designed to assess the success of the hiring decision, cost per hire is specifically the amount spent getting an employee into a business. That includes all those recruitment-related expenses listed above and it’s another key metric of success.

You can figure the cost per hire out by adding up all your internal and external recruitment costs over a specific period and dividing that number by the total number of hires you made during that same time.

Cost per hire = Total recruitment costs​ / Number of hires

Action plan: what to do after calculating ROI

Once you have your ROI data, you can truly assess your hiring efforts. Use this information to: