The cost of a new employee at an organization is not limited just to the salary and perks. A typical recruitment workflow begins with the creation of a job description and outlining of the skills and attitudes necessary for the ideal candidate. Based on this, a sourcing channel needs to be put in place, which would help create a funnel that would take applicants through various interview stages.
Once the candidate is selected, there needs to be an onboarding and orientation process, followed by training. All of these costs, efforts, and time can be considered as an investment in recruitment. Over and above these investments, a wrong hire can prove costly in many ways, including business results and replacement costs.
Why is it important to measure ROI on recruitment?
Any organization is a ‘going concern’ and its employees are what keep the wheels turning. This is why recruitment is an ongoing process.
Most companies have an annual recruitment plan along with a calendar and a budget. Year on year, this can be sharpened only if the organization also measures the returns from these investments. This would help identify gaps in the recruitment process, choose a particular sourcing partner over the other, or even fine-tune the job descriptions to attract the right candidate.
Organizations measure their performance across several parameters, and one of the most important of those parameters is their investment in recruitment. Depending on the industry and size of the company, and most importantly the kind of results it is looking for, each company needs to choose the correct metric to measure.
Important metrics for measuring recruitment ROI
A company could look at the returns in terms of time, efficiency, longevity of the hire, or cost, depending on what is more important. Some of the most common ways in which returns on recruitment investments can be tracked and measured are:
- Time: This could either be the time taken from the vacancy arising to the candidate joining, or the time taken for an application to be processed till selection.
- Efficiency: Hiring companies look at the number of applicants per opening, selection ratio (number of hires divided by the number of applicants), or offer acceptance rate (number of offers accepted divided by the number of offers made). Recruiters typically take applicants through a number of stages in the hiring process, and these efficiency ratios could be applied to specific stages as well, especially for those companies that have an extended recruitment process.
- Longevity: As we mentioned in the beginning, employee hiring costs are often looked at as a certain fraction of their annual salary. This is why a good metric is to look at the attrition within the first year of joining. Conversely, some companies consider the cost of getting an employee to OPL (Optimum Productivity Level) or the total Time To Productivity (TTP).
- Cost: The cost referred to here is a metric used for the human resource department, the hiring agency, or the sourcing channel. This is a ratio derived over the assessment period, usually a financial year, and is calculated by the sum of total internal and external hiring costs divided by the number of hires in that period.
How can Interview-as-a-Service boost your ROI on recruitment?
Whether it is specific hiring for a niche skill or volume hiring, every organization seeks to get the best return on its investments for hiring, whatever the metric it is measuring. To achieve an optimum speed and cost for hiring, more and more organizations are looking to get some or most of the screening and interviewing done by expert vendors.
The standout feature of Interview-as-a-Service (IaaS) is the use of artificial intelligence capabilities to achieve both speed and scale while ensuring better fitment with a profile. IaaS can also provide insights into the probability, or not, of an applicant taking up an offer if selected or staying with the company for the long haul.
An IaaS module can do away with possible bias in the selection process, which results in the best applicant being selected. A structured and consistent interview workflow also ensures that all applicants are gauged by the same yardstick, ensuring a fair and just recruitment process.
Two factors in the recent past have contributed to an ongoing war for the right talent. The first wave of the pandemic resulted in droves of resignations, opening up gaping holes in the talent fabric of several companies, which led to frantic hiring at unheard-of salaries, especially the in the technology industry. This was followed last year by mass layoffs when companies realized they had taken on more than they needed. Today’s need is to bring back stability into the job market quickly, and for that one of the best tools is Interview-as-a-Service.
COGBEE is an AI-enabled smart and collaborative candidate screening and interviewing platform. Its intelligent screening mechanism enables talent acquisition teams to comprehensively conduct the entire recruiting process.