Data-Driven Recruiting

How to Measure the ROI of Your Recruiting Software

Lauren Shufran

Lauren Shufran

Content Strategist

Posted on

July 28, 2021

Your recruiting software plays a pivotal role in your talent acquisition efforts—from identifying high-quality candidates to managing every stage of your hiring process. But how do you know if your recruiting software is actually working? Specifically, how can you prove that your recruiting software is helping your team move closer to your organizational goals?

The great news is that software makes the process of collecting, viewing, and leveraging data incredibly easy. After that, it’s simply a matter of tracking the right metrics to measure the ROI of your investment. We’ll use this post to share the four KPIs that we recommend using to prove the ROI of your recruiting software. 

4 ways to measure the ROI of your recruiting software

1. Time to hire 

Time to hire refers to the amount of time between when a candidate first enters the pipeline and when they accept an offer from the company. This is an important metric to measure because hiring is a resource-intensive process—both in terms of time and money. 

On average, recruiters are spending ⅔ of their overall hiring time on the interview process. And every day that a position is open costs money—between running job ads and lost productivity from not having enough team members or having to interview multiple candidates for a single role. 

By understanding your average time to hire, you can compare it against benchmarks from your industry and company size. This can either determine that your recruiting software is delivering ROI or help you identify potential problem areas that may be eating into your recruiting costs.


Let’s say you notice that your passthrough rates are low. So you take a closer look at the data from your recruiting software to understand why. You learn that hiring managers are taking too long to update candidates between interviewing stages, causing those candidates to drop out of process. Knowing this, you introduce strategies—such as introducing automated messages or enforcing a 24-hour response time—to optimize for speed. As fewer candidates drop out of process, your time-to-hire increases. You can then use data on the cost of excess vacancy days (in tandem with HR) to determine the $ ROI from a time-to-hire perspective. 

How to measure time to hire

To calculate time to hire, assume that the day you opened a specific role is Day One. Then count the number of days it takes for a candidate to enter the pipeline and subtract it from the number of days it takes for them to accept an offer. 

So, for example, let’s say a candidate applied for your job opening five days after it was posted. Then they accepted an offer 20 days after the job was posted. Your time to hire is 15 days. If you want to calculate an overall average, figure out the time to fill for several candidates and divide that by the number of candidates. 

Also, keep in mind that many recruiting solutions can automatically calculate these numbers for you!

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2. Diversity metrics 

Diversity is the number one topic of conversation in recruitment this year. So it’s never been more important to measure how you’re progressing toward hiring diversity metrics, such as ensuring a percentage of your pipeline is filled with people of color (POC) or making sure specific roles where minorities are underrepresented are being filled with diverse hires. 

It’s easy to set diversity goals, but it’s difficult to say whether or not you’re making progress without measuring them. By tracking these metrics, you can see how effective your recruiting software is at sourcing diverse candidates and adjust your recruiting process as needed. If your recruiting software isn't helping you think about the diversity of your hires, you might want to consider an addition to your tech stack that will.


You recognize that your engineering leadership team is very homogenous, so you decide to create a goal of having at least 40% of the roles on that team be filled with either women or POC. With this goal in mind, you use your recruiting software to track your candidates' gender, race, and ethnicity and identify potential bottlenecks or biases. 

How to measure diversity metrics

How you track diversity metrics will depend on your goals! Regardless of what they are, we encourage you to break down the data in multiple ways—whether that’s by recruiter, department, role level, or geography—and across every step of the hiring funnel so that you’re working with a complete picture. 

For example: At Gem, we offer top-of-funnel metrics to help you understand the pipeline your team is building. Sourcers, recruiters, and talent leaders can report on the gender or race and ethnicity breakdowns of their pipelines to discover how their efforts are impacting diversity. This data can not only shed light on whether teams are reaching out to a diverse talent pool, but also reveal where systemic biases might show up—by role, recruiter, or hiring manager—as some candidate segments get stuck at certain stages of the funnel. 

3. Candidate satisfaction 

Candidate satisfaction looks at how candidates felt about going through your hiring process—regardless of whether or not they were extended an offer. Was it personalized? Was it speedy? Did candidates feel they got to present their strongest skills to you in the process? Were there just enough stages that you could mutually “qualify” each other? Would they apply again—or recommend you to people in their networks? 

Candidate satisfaction is a critical metric to measure, given that 60% of job seekers report having a negative candidate experience. This can create a negative ripple effect, dissuading candidates (and their networks) from applying to other open positions in the future. It also directly impacts your quality of hire, which is a data point you can partner with HR to come up with. You want to make sure that everyone who interacts with your brand comes away with a positive impression, which can only happen by measuring how candidates feel about their experience with you.


Looking at the results of your candidate surveys, it’s clear that people are walking away from your interview experience with a negative perception of your company. When you dig in further, you see it’s largely because candidates feel there are too many stages in your process, and you’re not respecting their time. Pairing these surveys with passthrough rates will help you see which of your interview stages is excessive (or even insulting), and optimize your hiring funnel by removing those stages. 

How to measure candidate satisfaction 

There are many ways to measure candidate satisfaction. We typically recommend using a survey to keep a finger on the pulse of candidate sentiment. You can also look at metrics like passthrough rates and rejection reasons via your software to understand how candidates feel at every stage of the recruiting process. Here are examples from Gem’s Pipeline Analytics and our Executive Dashboard, which pulls rejection data directly from your ATS: 

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4. Cost per hire

Cost per hire refers to the average amount of money you spend to fill a role. This metric is helpful to track because it informs your recruiting budget and allows you to compare your spending over a period of time. Your cost per hire also reflects how much money your recruiting software saves you—such as the cost of using search firms or external recruiters. 


You invest in a software solution in an effort to bring your recruiting efforts in-house. Over time, you discover that—between the automation, data, and analytics that your software provides—your team is able to hire high-quality talent at a lower cost per hire than your search firm. This ultimately saves your company hundreds of thousands of dollars in external fees every year. 

How to measure cost per hire 

The Society of Human Resource Management (SHRM) and the American National Standards Institute (ANSI) created a standard formula for calculating cost per hire, which is to add up the costs associated with both internal recruiting and external recruiting efforts and divide that by the total number of hires. 

Aside from these KPIs, if you see that your response rates, interested rates, or offer acceptance rates are in a good place, or you soon find that you have a robust and high-quality talent pipeline where you didn’t before, it's also a good sign that your recruiting software is doing its job. If you're not seeing these results or getting what you need from your solution, reach out to us—we'd love to help!


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