Return on Investment (ROI), Explained!!

We have all heard the acronym ROI, we all know, or you do now, that it stands for "Return on Investment". However let’s really look at what that means.

Simply put ROI can be broken down into 4 components, below each are examples of things to look at, for the purposes of this posting we will look at staffing ROI, but the 4 components are universal across all functions:

1. Cost - how much did or is it costing to get the job done or make the product?

a. cost per hire

b. advertising cost

c. relo costs

d. sign on bonus costs

2. Quality - is what we are doing, making, or creating of the highest standards?

a. level of hire

b. number of hires still at company after 1-3-5 years

c. review scores of new hires

d. new hires promoted in first year

3. Time - how long is it taking?

a. time to fill

b. time to interview

c. time to start

d. time to screen

4. Satisfaction - are our customers happy?

a. client/consumer sat

b. candidate sat

Please keep in mind this was a simple an easy view of ROI. It can me much larger and more complex. You can use an almost limitless amount of criteria to look at under each component to make your ROI view.

Also keep in mind just the ROI numbers themselves do not tell the whole story. What they do is tell you were to look harder to get the whole story.