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Talent Assessment | 2 Min Read

Faster, Better, Cheaper: Efficient Recruiting, Online

Are your HR efforts really paying you? Through this post we offer you 3 spreadsheets which will help you measure your HR efforts through RoI (return on investment) calculation. Use this tool to finalize your actual HR budget as well as to monitor performance of online assessment tools in terms of facilitating your organization with Better Performers, Reducing Turnover and Increasing Efficiency.

We calculated Return on Investment gained by hiring better performers at 37233% (by using simulated assessment). Astronomical figure you think? This may seem unrealistically large, but this reflects the long-term impact that “assessment tools can have by increasing the average performance of an entire workforce”.  While it is difficult to ascertain the actual value of ROI provided by use of online assessment tools, use of ROI calculator spreadsheet provided by us can give you a valuable insight into the financial gains of using online assessments as part of your employee selection process. Let us show how you can do this:

ROI of Hiring Better Performers

Extensive research has shown that well designed online assessment tools can help in hiring better employees and hence better performers. By using a simulated assessment tool (such as spreadsheet skills evaluator) a recruiter can get an RoI of 37233% on the amount of money invested in assessment platform.  As mentioned earlier, these numbers might seem unrealistically large, however these are long term impact of that assessment tools can bring to an organization. Imagine the impact if the average performance of each employee in your company is improved by 5 percent.

Update/Input figures in the RoI calculator sheet below to estimate the financial gains provided by hiring better performers.

(In case the model does not appear, click here to view the model in full screen)

While all the input parameters are self explanatory and present in the excel, calculating Increased Hiring Effectiveness is important to understand how these numbers are arrived at (you can find these in the sheet named “Calculations” of the above spreadsheet):

Increased Hiring EffectivenessThis indicates the relative weight of assessment tools in improving the quality of your hiring decisions. Estimating hiring effectiveness is not a difficult task. The effectiveness ranges between 0 (for random hiring), 0.02 for unstructured interview, 0.10 for structured interview, 0.15 for knowledge and skills (personality) test, 0.25 for Ability test to 1 for perfect hiring. Subtract the effectiveness of the assessment tools/methods you currently use from the online assessment tools you are going to use. For example: Unstructured Interview .02 (current assessment method) – (minus) Structured Interview 0.10 (assessment method you are going to use)=0.08 (hiring effectiveness). 

ROI of Increased Staffing Efficiency

Online assessments help to improve efficiency by cutting down administrative time spent screening candidates, resulting in 1100% ROI. Again hard to believe? Calculate yourself and find out.

The benefit of using online assessment tools is that it helps in reducing the administrative time spent in screening a candidate- from reviewing resumes, coordinating and conducting interviews and holding interview rounds. Using online assessment tools can significantly help your business get 1100% or more ROI by increasing staffing efficiency.

Just edit the various input parameters according to your organization to find out ROI and projected gain due to increasing staffing efficiency.

ROI of Reducing Turnover

Turnover is the attrition of employees through voluntary or involuntary terminations. Turnover results in costs to the employer from productivity loss, training new employees, advertising for new jobs etc. This worksheet will help you calculate ROI of reducing turnover of your company by using online assessment platforms. Knowing this ROI will help you determine and plan investments that you can make on online assessment platforms.

Online assessment tools are specifically designed to help organizations reduce turnover. When used properly, these tools can reduce turnover by 10 percent or more. Businesses that track reduced turnover rates provided by use of online assessment tools are in a good position to spot employee trends and plan effective hiring budgets.

Hiring managers are increasingly using online assessment tools to assess talent, skill set and personality of a candidate. It is high time that they start keeping track of their online staffing assessment tools. For companies that face the pressure of clearly defining the returns on their staffing and HR investments, ROI can be used as a primary tool for forecasting and evaluating benefits of hiring better performers, reducing turnover and increasing staffing efficiency through online assessment tools.

Do let us know about the benefits that you’ve reaped from using online staffing assessments systems like the ones mentioned in this article or something else.


Calculating the ROI of Online Staffing Assessment SystemsCharles A. Handler Ph.D. and Steven T. Hunt, Ph.D.

Originally published April 2 2018, Updated June 16 2020


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