How to evaluate the ROI of your job board vendors

Earlier today, I had an interesting call with a long-time acquaintance who is very, very well respected as one of the world’s foremost hiring experts. Every time I get to speak with him, it is a real treat as he’s gracious and full of wisdom that he gladly shares.

The question that he asked was how a Chief Financial Officer (CFO) of a large organization can advise their Chief Human Resources Officer (CHRO) on evaluating the returns on investment (ROI) of their job board vendors. Should human resources (HR) look to the length of time that candidates from one job board remain with the employer versus candidates from another? Should the productivity of those employees factor in and, if so, how do you measure that? Is there a better approach?

At a high level, I made the point that individuals and organizations should be held accountable, but only for matters largely within their control and not for matters largely outside of their control. Job boards are not involved in the screening or selection of candidates, and so job boards should not be held accountable for screening, selection, or anything that comes after those steps, including how long an employee remains with the employer or how productive they were during that tenure.

Although I think that I made the case for not evaluating the ROI of job boards based on factors such as longevity or productivity of employees, I had not yet made the case for how job boards should be evaluated. I recommended a somewhat structured approach to guide this evaluation.

First, the CHRO should clearly define their objectives. In other words, they should start by identifying what the company aims to achieve with its investments in job boards. Common objectives might include the number of candidates who view a posting, the number who engage as measured by how many click the apply button, the number who apply, quality of those applications, number of interviews, or even improvement in time-to-hire or cost-per-hire. In other words, what one employer means by “return” can be quite different from how another employer looks at the same term in the numerator field.

To accomplish that step, the CHRO is going to want to establish the key performance indicators (KPIs). Four of the most common would be:

1. Quality of Hire: Evaluate the performance and retention rate of employees sourced from each job board.
2. Cost-Per-Hire: Calculate the total cost associated with each hiring source, including job board fees, recruiter time, and administrative costs.
3. Time-to-Fill: Track the time it takes to fill positions posted on each job board to assess efficiency.
4. Applicant Quality: Measure the percentage of applicants from each source that moves to interview stages.

Second, the CHRO is going to need to pay particular attention to how that data is gathered, because if the data is poor, so will be the ROI calculations. I’ve heard many times, “Some data is better than no data.” No, it isn’t. Data that is misleading results in fundamentally flawed recommendations. It is better to understand that your data is limited or even flawed and so the recommendations that flow out of that data should be viewed skeptically than to throw a bunch of bad data at someone and then expect them to make good decisions. So, the CHRO needs to ensure that HR collects accurate and relevant data from its systems and job boards, such as the number of applications, interviews, hires, and turnover rates for roles filled through different platforms.

Third, time to analyze. The ROI calculation itself should be pretty easy: what was the net gain from the investment (i.e., X qualified applicants) less the cost of that investment (i.e., staff time, fees from the job boards) all divided by the cost of that investment. Repeat this calculation for each job board or other sourcing tool that you’re analyzing.

Expect that some job boards will have a larger ROI than others, but don’t expect to eliminate all of the job boards whose ROI is less than the job board with the best ROI. Let’s say that Indeed, LinkedIn, and College Recruiter all have good ROIs and another five job boards have ROIs which are far, far worse. You’re not going to want to only work with Indeed or LinkedIn or College Recruiter moving forward, even if one of them has an ROI much better than the others. Why? One reason is that it creates a lot of risk to only use one vendor for any particular function. In other words, you don’t want to put all of your eggs into one basket in case something bad happens to that basket. Another reason is volume: even if Indeed does a great job of driving say 60 percent of your applicant flow and LinkedIn another 25 percent and College Recruiter another 15 percent, you don’t want to go only with Indeed because you’re going to be missing 40 percent of the applicant flow that you need.

Some other considerations:

• Qualitative Factors: Look beyond the numbers to consider user experience, brand impact, and candidate feedback. These elements can influence the employer brand and long-term recruitment success.
• Regular Reviews and Adjustments: Make it an ongoing process to review the performance of job board vendors regularly. Market conditions and company needs evolve, so your approach should be dynamic and adaptable.
• Leverage Technology: Suggest investing in analytics tools that integrate with your HR systems to automate data collection and reporting. This will provide more accurate insights and save time.

By systematically assessing the effectiveness of job board vendors using these steps, the CHRO can make informed decisions that align with the company’s financial goals and recruitment strategies. This not only optimizes recruitment spending but also ensures that the company attracts high-quality talent efficiently.