Budgets regarding hiring are being strained on every side.

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CFOs need reduced cost-per-hire. Manager hiring is about faster results. Applicants are demanding superior experiences. Your recruiters, on the other hand, are being overwhelmed by a load of administration that adds no value but is consumed by hours per day.

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The traditional model of recruitment, which is to employ additional recruiters, advertise on more boards, and wish to have improved results, is not on the menu any longer. Intelligent businesses are starting to realize that automation does not mean doing it faster; it means radically altering the way recruiting expenses and how that money is spent.

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The guide below will demonstrate how to work out you cost-per-hire savings when you adopt the automation services offered by Recooty. Most importantly, it will teach you to determine the gains that are most applicable to your organization and not the ones everybody is talking about.

The Reality Behind Cost-Per-Hire

The issue with most HR teams is that the majority of them fail to estimate the real cost-per-hire, due to the fact they fail to consider the hidden costs that are consuming their budget. The formula of calculation is easy to read on paper, however, the situation is not that straightforward.

This is what you are actually measuring: 

Cost-Per-Hire = (External Costs + Internal costs)/Number of Hires.

The tricky part? It is those internal costs that make most organizations bleed without being aware of it.

Internal Costs: The Budget Killers You Are Lacking

Your recruiters are currently wasting about 40 percent of their time in manual tasks that can be automated tomorrow. The same period is directly translated into salary expenses that give no value in the hiring.

Think about this breakdown of the real whereabouts of your internal recruitment budget:

• Time a recruiter spends on resume screening, where they have to go through hundreds of applications and one by one, manually, to filter out those that do not even qualify as a basic requirement.
• The time of the hiring manager spent in coordinating interviews rather than assessment of candidates.
• Scheduling, rescheduling, and communications with the candidates overheads.
• Technology expenses on various disintegrated tools that do not communicate with one another.
• Co-ordination duration between team members using varied systems and processes.

The majority of the companies find that they spend 2-3 hours of administrative task on every hour of the actual recruiting process. It is money that you are already wasting just inefficiently.

External Costs: When Conventional Solutions Fail

Recent years have seen the external recruitment cost blow out of proportion yet most organizations are still following the same old formula of pouring more money into job boards and hoping that they will achieve different results.

The external cost reality check consists of:

• Job board fees that continue declining as the quality of responses declines.
• Commission can go up to 30 percent of first-year pay.
• Background check services that take time to hand over your process manually.
• Service subscriptions your team hardly utilizes at all.

Worse still, such external costs tend to be counterproductive rather than producing a unified hiring process.

Your Step-by-Step Reduction of Cost-Per-Hire Calculation

The thing is, this can be exemplified by a real-life example where most mid-sized companies undergo the implementation of recruitment automation.

The Before Picture: The Conventional Recruitment Spending

Consider a month in which a company takes 10 employees:

What You're Paying Your Team:

• Two full-time recruiters are paid 6000 each = 12000.
• Hiring Managers who take 20 hours of coordination = $4,000.
• Administrative coordination (scheduling, communications) = $ 2,000.
• Internal monthly total: $18,000

What You are Paying The Outside Vendors:

• Placing of job boards in various locations = $3,000.
• Agency fee of positions that are hard-to-fill = $15,000.
• Background checks on a per hire basis of 120 = 1200.
• Evaluation tools and subscriptions = $800.
• External monthly total: $20,000

Your present math: $38,000/ 10 hires = $3,800/ hire.

The After Picture: Efficiency of the Automated Recruitment

There is the same company, identical recruitment criteria, and yet Recooty does the heavy lifting:

What you are paying your team (now smarter):

• Efficiency gains (one and one-half recruiters) = 9,000.
• Cost of hiring managers who spend 8 hours on actual assessment = $1,600.
• Eliminated administrative overhead almost = $0.500.
• Recooty platform subscription = 2000.
• Internal monthly total: $13,100

What You are Paying Outside Vendors (Less Dependency):

• Automation of job distributions on bulk rates = $1,500.
• Reduced agency dependency = $5,000
• Background checks in large numbers = 800.
• Great combined evaluation skills = $400
• External monthly total: $7,700

Your new math: $20,800 / 12 hires = $1,733 per hire

Numbers That Matter to Your CFO

• Reduction per hire: $3800-$1733= $2067 less per head.
• Percentage change- 54.4% cost reduction.
• Monthly savings: $2,067 x 12 hires = $24,804
• annual benefit: close to $300,000 in saving.

You are also employing 20% more individuals with the same team and this implies that your cost-per-hire decrease is being used to finance your growth.

Industry Reality Check: Where You Are

The cost-per-hire also drastically depends on the industry, however, the tendencies are the same; organizations that apply automation are outperforming the ones that are trapped in the manual process by far.

Sector Current Benchmarks

• Technology firms: $4, 000 -6, 500 to hire (Automation users are 35 percent less average than manual processes)
• Medical organizations: $3,500 -5, 200 per employee (automation reporting 40% cuts)
• Financial services: $4,500 -7,000 per employee (largest automation ROI based on compliance needs)
• Manufacturing: $2,800 -4,200 per recruit (automation will cut time-to-hire by half)
• Retail: $1500 - 3000 per hire (volume hiring experiencing a tremendous improvement in efficiency)

How Recooty Turns the Cost-Per-Hire Game

The sole concern of the majority of automation tools is to make the current processes faster. Recooty does it another way, it eradicates the processes which should not be there at all. On average, an effective ATS is proven to decrease the hiring cycle by as much as 60%.

AI-Powered Sourcing

The conventional candidate sourcing is close to searching a needle in a haystack with blindfold on. Your recruiters are scrolling through profiles and making educated guesses regarding the fit of the candidate in addition to manually reaching out to potential candidates who may not be interested at all.

Artificial intelligence in the sourcing at Recooty reverses this:

• Smart candidate discovery occurs on multiple platforms at once as your team concentrates on conversations and not searches.
• Automated profile matching does not involve the guessing game with key words, but the actual job requirements.
• Available in real-time, you are only reaching candidates who are willing to opportunity.
• Predictive scoring prioritizes the applicants according to their chances of accepting, rather than on paper qualifications.

The result? In the first month, most of the teams reduced their time spent on repetitive tasks by 80% percentage. Not only is that quicker recruiting, but that is actually transforming the quality candidate-to-pay ratio.

Screening of Candidates Devoid of Bottlenecks

The most common bottlenecks in the hiring process are Resume parsing and initial screening. You and your team waste hours going through applications that must not have passed the first filter.

The automation of screening candidates at Recooty deals with this directly:

• Incident intelligent resume parsing removes manual screening of relevant skills and experience.
• Automated qualification scoring will use your real needs in place of generic filters.
• Video interview pre-screening saves you the time of having candidates taking up your teams time, by licensing themselves.
• Automation of reference checks removes the two-way communication that usually causes weeks to your process.

Automation of Workflows: Slay the Busy Work

The administration aspects that are taking your time as a recruiting team are unnecessary and just an necessary evil to keep the process going. Until now.

The workflow automation by Recooty eliminates the busy work completely:

• Automated job distribution applies your job openings to 250+ job boards in a single click, not fifty.
• Smart scheduling arranges interviews along with the real availability of all the people and not the email tennis.
• Candidate communication sequences allow the candidates to remain busy with personalized messages without necessarily having to send them manually.
• The Interview coordination can be used to make confirmations, reminders and rescheduling without human intervention.
• Offer management simplifies approvals and document creation which typically engages several individuals and systems.

Informed Decisions, No Guesswork

The majority of recruitment analytics inform you of what occurred when it was already too late to be of consequence. The analytics dashboard created by Recooty concentrates on what is in control:

• Performance tracking on a real-time basis will make you aware of the sources that are providing you with quality candidates at this moment.
• Cost analysis spends out your actual spending per hire on all channels and activities.
• The identification of the bottlenecks identifies precisely where candidates are stalling on your process.
• Quality correlation relates the source effectiveness with long term success on hiring.
• Industry benchmarking reveals the comparison of your metrics with the companies, which face the same predicament.

To Bring to Fruition Timeline: What to Expect When

Week 1-4: Foundation and Quick Wins

Setting up of platform and connecting with existing systems. Team training and preliminary process documentation. Concentrate on job distribution automating and simple screening of candidates.

Anticipated effect: 20-30% less work in the administrative department, instant changes in the efficiency of job posting.

Weeks 5-12: Complete Implementation and optimization

Complex workflow automation in the whole hiring process. The use of analytics dashboard and optimization of sources. Personalized communication message and coordination of interviews.

Anticipated outcome: Cost-per-hire will be reduced between 40-50 percent, time-to-hire and quality of candidates will improve.

Weeks 13-26: Experienced Strategy and Scaling

Interdepartmental, role-specific workflow development. Demand forecasting of hiring through predictive analytics. On-going streamlining on the basis of performance data.

Projected effect: 50-65% drop in cost-per-hire rate and no or better quality indicators.

How Recooty Does More Than Simple Automation

The largest error that companies commit is that they automate the bad processes rather than initially fixing them. The first thing you should do before you choose to automate your processes is to map out your existing candidate journey and see the steps that simply should not be there in the first place.

The first step to candidate journey optimization is to know what points people are lost in your process and why. The automation of the workflow in Recooty can remove up to 15 manual processes per hire, however, the key is that you should be removing the correct processes.

The integration strategy is more than what people believe. Unless Recooty is communicating with your HRIS, payroll system, and onboarding platform, you are building new silos rather than destroying the old.

The monitoring of performance must be based on the leading rather than lagging indicators. Record time-to-first-interview, rather than time-to-hire. Track the candidate response rates to various communication templates. Hire only when satisfaction with the quality of candidates is achieved by the hiring manager and not their number.

FAQs

When will I realize ROI of automation of recruitment?

Majority of the organizations break the breakeven mark in 6-8 months, although you will see the cost reductions in the second month. The point is that automation develops various value streams - fewer expenditures on the internal organization, higher efficiency of spending on the external one and quicker recruitment that influences the business performance. All these advantages are cumulative and that is why the ROI of year 2 is normally 300-400 times more than the year one.

What will be the case when automation decreases the quality of candidates?

It is the fear that most people share, and it is rooted in the misconception of the modern automation functioning. Recooty does not override the human judgment, it gets rid of the administrative stuff so your team can concentrate on the evaluation and the building of relationships. The quality is actually increased since recruiters handle more time as they talk to candidates and minimal time in pushing paper. It is all about good installation and constant supervision, and that is why the assistance in implementation is important.

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