How to Measure the ROI of Your ATS

An Applicant Tracking System (ATS) is a cornerstone of modern recruitment strategies, streamlining the hiring process and enabling organizations to manage candidate workflows more effectively. While implementing an ATS can result in significant improvements in efficiency and hiring outcomes, it is essential to evaluate its return on investment (ROI) to ensure its value aligns with organizational goals. Measuring the ROI of your ATS involves analyzing financial, operational, and qualitative factors that demonstrate its impact on your recruitment processes.

Here’s a comprehensive guide to help you measure the ROI of your ATS effectively.

1. Understand the Key Metrics for ROI Calculation

To assess the ROI of your ATS, it is important to identify the right metrics that align with your recruitment goals. These metrics should cover cost savings, process improvements, and enhanced hiring outcomes. Key metrics include:

Time-to-Fill: Measure the reduction in the time it takes to fill open positions. An ATS often automates candidate sourcing, screening, and communication, significantly reducing time-to-fill.
Cost-per-Hire: Analyze the overall cost of hiring a candidate before and after implementing an ATS, factoring in advertising, sourcing, and administrative costs.
Quality of Hire: Evaluate the improvement in the quality of hires made after implementing the ATS by tracking employee performance, retention rates, and manager satisfaction with new hires.
Recruiter Productivity: Assess how the ATS has increased the efficiency of your recruitment team. Metrics such as the number of requisitions handled per recruiter and time spent on administrative tasks are key indicators.
Candidate Experience: Measure improvements in candidate satisfaction, often through surveys or feedback mechanisms. A streamlined application process facilitated by an ATS can enhance the candidate experience.

2. Calculate Direct Cost Savings

An ATS can lead to significant cost reductions in various areas:

Advertising and Job Board Costs: Many ATS platforms integrate with multiple job boards, allowing organizations to post job listings efficiently and often at discounted rates.
Administrative Costs: Automating repetitive tasks like resume parsing, candidate communication, and interview scheduling can save considerable time and reduce manual labor costs.
Third-Party Recruiting Fees: With improved sourcing and talent pool management, reliance on external recruitment agencies can decrease.

To quantify direct cost savings, compare expenses in these areas before and after ATS implementation.

3. Evaluate Time Savings and Productivity Gains

Recruitment involves numerous time-consuming tasks, from reviewing resumes to coordinating interviews. An ATS automates and simplifies these processes, enabling recruiters to focus on strategic initiatives like employer branding and proactive sourcing.

For example, if your recruiters previously spent 40 hours per week on manual tasks and the ATS reduces this time to 20 hours, you can attribute the time saved to increased productivity. To calculate the monetary value of this time, multiply the hours saved by the average hourly cost of a recruiter’s salary.

4. Assess the Impact on Hiring Outcomes

Hiring better candidates faster is a critical benefit of an ATS. To measure this, track metrics such as:

Retention Rates: A better match between job requirements and candidate qualifications often leads to higher employee retention.
New Hire Performance: Analyze performance data of employees hired through ATS-enabled processes to identify trends in productivity and alignment with organizational goals.
Diversity and Inclusion: An ATS can help organizations meet diversity goals by removing biases and expanding candidate pools. Evaluate progress in meeting diversity objectives post-implementation.

5. Quantify Candidate Experience Improvements

The candidate experience is a vital aspect of recruitment, as it impacts your employer brand and the likelihood of top talent accepting offers. An ATS often improves this experience by:

Reducing application times with user-friendly interfaces.
Providing timely updates and communication.
Offering transparency in the hiring process.

Conduct surveys to gather candidate feedback and compare satisfaction levels before and after ATS implementation.

6. Include Intangible Benefits

While some benefits of an ATS are easily quantifiable, others are more qualitative and equally important to consider:

Employer Branding: A professional and efficient recruitment process reflects positively on your organization, enhancing its reputation in the talent market.
Scalability: An ATS supports business growth by enabling your recruitment team to handle larger volumes of job openings without compromising quality.
Data-Driven Decision Making: With advanced analytics and reporting capabilities, an ATS allows organizations to identify bottlenecks and optimize processes proactively.

Although these intangible benefits may not directly translate to financial metrics, they contribute significantly to the overall ROI.

7. Use a Simple ROI Formula

Once you’ve gathered data on cost savings, productivity gains, and hiring improvements, you can calculate ROI using the formula:

ROI (%) = [(Total Benefits - Total Costs) / Total Costs] x 100

Here’s a breakdown:

Total Benefits: Include direct cost savings, productivity gains, and other measurable improvements.
Total Costs: Factor in the cost of the ATS subscription, implementation fees, training, and ongoing maintenance.

8. Conduct Regular Reviews

The value of your ATS should be continuously monitored, as recruitment needs and market conditions evolve. Schedule periodic reviews to assess its performance and identify areas for optimization. Engage key stakeholders, including recruiters, hiring managers, and IT teams, to provide feedback and ensure the system meets organizational needs.

9. Benchmark Against Industry Standards

Compare your ATS performance with industry benchmarks to gain a clearer perspective on its effectiveness. For example, if the industry average time-to-fill is 40 days and your ATS reduces this to 25 days, it highlights a significant competitive advantage.

10. Align with Strategic Goals

Finally, ensure that the ROI of your ATS aligns with broader organizational goals. Whether your focus is on cost reduction, faster hiring, or improved candidate quality, the ATS should contribute directly to achieving these objectives.