USA
Mexico
Colombia
Costa Rica
Chile
Peru
Brazil
Spain
France
UK
Italy
Germany
Netherlands
PortugalReports and Statistics
How is ROI calculated in HR?
We explain how to calculate ROI in human resources and make the most of your investment.
Marcos Lopez
HR Consultant
7 of April, 2025
One of the most interesting indicators when analyzing any strategy is the return on investment. The famous ROI (Return on Investment), the money recovered for each euro invested. And just as we can talk about ROI in marketing, we also need to know how to calculate the ROI in human resources.
After all, each employee is an investment. Beyond what we invest in the staff selection process, workers come with expenses. Expenses that are actually an investment in the future of the company. Therefore, it is interesting to know the return of our team.
What is human resources ROI?
The ROI in human resources refers to the benefits obtained by the investment made in the workers. To do this, we will have to gather a series of financial data related to the investment in employees and the results. From there, we will do the ROI calculation in HR.
Thanks to this indicator, we can measure and quantify the work of our team. Based on the results, we can make better use of time and money. It also allows us to know if workers are acquiring the appropriate knowledge. In this way, it will be easier to justify or defend the spending on staff training.
Knowing the ROI, we can determine the profitability of each investment and modify it if it generates losses. It also allows setting real goals and objectives based on data, or demonstrating the viability of the projects. In short, we optimize each euro invested in human resources.
How to calculate ROI in human resources
The formula for calculating ROI is always the same, no matter if it is the ROI of HR or of any campaign. To obtain it, we use the formula ROI = (Income – Investment) / Investment. The result is usually multiplied by 100 to obtain a percentage to analyze the return on investment.
Unlike other ROIs, that of human resources is somewhat more complex as subjective variables influence it. For example, the worker’s motivation. They will not generate the same income every day. The work climate or even labor absenteeism can have effects on the final result.
In any case, when the ROI in human resources yields a positive figure we can say that the investment is justified. In this case, the result will always be greater than 0. Another thing is if we have reached the desired percentage, but the investment generates profits. For example, if it is a 0.3% the ROI is minimal.
The other side of the coin is the ROI in HR with a negative figure. In this case, the costs of the investment are higher than the benefits obtained. We are generating losses, so we will have to rethink the situation. The easiest is to pause the actions and optimize the HR management strategy.
We cannot rule out that the negative ROI is affected by the short trajectory of the employee. If it is a recent addition, there is always the possibility that they are not 100% adapted to their job. The beginnings are difficult, but when they get used to the job, their productivity will rise and, with it, the ROI in human resources.
KPIs for calculating ROI in HR
Another characteristic of ROI in human resources is that it can be used with different indicators. When we launch a marketing campaign, there will only be one way to calculate the return on investment. However, human resources opens the door to the analysis of different parameters:
- Duration in the position: allows us to know if the investment in HR comes with talent retention. Thus, it is easier to evaluate the stability or instability of the staff.
- Average hiring time: the longer it takes, the more money the company is losing. The ideal is to fill the vacancies as soon as possible… as long as we find the right person.
- Average in achieving objectives: allows us to know the efficiency of the employees. In addition, it differentiates between new additions and more experienced workers.
From the human resources department, appropriate performance indicators will need to be established. From there, we will calculate the relationship between the cost of the workforce and profitability. The key, as always when we talk about this type of indicator, is in working with the right ones.
Human Resources ROI: Your HR Software
Did you know you can also calculate the ROI of your human resources software? Solutions like Sesame HR help us optimize HR work. The organization works in a much more agile and efficient way, regulations are met, the employee experience is improved… And we all want to put figures on that efficiency.
You only have to calculate the net cost of the software and divide it by the benefit of the investment. In this way, it will be much easier for you to quantify the economic savings that Sesame HR represents for your company. It is also more evidence when justifying the need for such a tool to the company’s management.
Remember that solutions like Sesame HR help you develop the human resources strategy. From the selection process and onboarding to managing training or worker experience, it provides us with key information. Then, we can use it in KPIs to measure its impact.
The investment in human resources is always justified. Having a trained staff and prepared for the challenges provides us with a great competitive advantage. But you have to invest wisely. In this sense, knowing the ROI in human resources will be key when investing well.
Do you want to learn more about the topic? You can find all kinds of content related to human resources investment on the Sesame HR blog. Don’t miss them if you want to put together the best work team!
Need help?
I'm Isabel, HR consultant at Sesame HR. Book a meeting with my team to help you.