In our monthly webinar, we would talk about our new tools and new launches that would benefit the customers in terms of recruiting. But since many of our customers are in the process of setting up their budget for implementing an HR Tech System in their organization, we were flooded with queries on how to set up the budget, for procuring the proper tools, and convince the management of the importance of setting up an appropriate HR tech system.
So with the idea of educating our customers, we have planned for this webinar which would focus on;
1. Understanding the cost behind recruitment
2. Expert strategies to maximize ROI and
3. How can Xobin help you in maximizing your ROI?
Understanding the cost behind recruitment
Generally, the cost behind the recruitment process can be segmented into two categories, which are planned and unplanned expenses. Planned expenses are usually easily accounted for, wherein the cost is evident for example the cost of using a tool for recruiting and assessing the cost of marketing your brand and the cost of conducting any events like hackathons that would attract the potential candidates. Other planned expenses would be associated with recruiting a specialist for a particular job. When such people are involved the cost incurred would be for the time that they spend on the work in your organization. So all these expenses would ideally be grouped under planned expenses.
Unplanned expenses can be avoided, by deprecating bad recruitment practices, but sometimes it is unfortunate, though you try your best to avoid these expenses it is inevitable. Issues of the wrong hire, last-minute dropout by the candidates, and of course opportunity costs all can be grouped under unplanned expenses.
For a better understanding of the cost behind the recruitment process, I would like to take an example of, challenges while hiring a full-stack software developer for an organization with less than 100 employees.
In a developing country like India, a qualified person for hiring would charge around 2 times lesser than a specialist from a developing country. Say for example the hourly expense that you will have to incur for a specialist in India would be around 10$/ hour and interviewing 100 candidates he/she would take a minimum of 70 Hours, which would result in you spending 700$ for the whole interview process.
Cost of recruitment tools
The next direct planned expense that will reflect on your budget will be the cost spent on recruitment tools. In the present situation, the first tool that comes in handy is the ATS which would cost you an average of 5$ / employee which is the current industry standard that would equate to around 100$ / month. The screening tools charge you on the basis of how many assessments you have given out, so assuming the above number of qualified candidates, an industry-standard cost of 2$/ test could cost you around 200$ for screening talents. Marketing the vacancies in your organization on any job portals like Naukri, or Indeed, LinkedIn which operates on a pay-per-click, where the cost usually revolves around 1$ / candidate. Ideally, summing up all these most companies spend around 400$ on recruitment tools. So on average, the cost of recruitment would be oscillating between 1100$ in India and 2500$ on a Global scale. Excluding the opportunity cost, which would be 30$ / hour, the planned expenses that an organization would spend on the process of hiring a recruiter and procuring the tools that would aid in recruiting.
Unplanned expenses are mainly because the candidate drops out at the last minute before accepting the job or he quits the job one or two weeks after joining the company. Here the recruiter has to incur the cost of recruiting the candidate which would eventually be a waste of resources when the candidate quits the job.
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Another indirect cost would be a result of the wrong hire. But by the time you realize that they aren’t the best fit for the company, it would be three months, and to lay off the candidate it would take another three months down the lane. This is one of the huge costs that the company would have to bear since it would be the cost of salary paid during the candidate’s tenure in the organization + Training resources that the company has invested. On average the organization spends up to 18,000$ in India on the wrong hires, and globally it would be around 53,500$. These kinds of costs will be huge costs that the company would add up to unplanned expenses in the process of hiring. The overall cost involved in the recruitment process would be a sum of planned and unplanned expenses that would be around 1500$/hire in India to 80,000$/hire on a global scale.
Expert strategies to maximize ROI
The ways that help the recruiter in maximizing the ROI are by ideally eliminating the unplanned expense and reducing the planned expense by 70%.
The best way to get the job done is to find your recruitment swiss knife i.e. finding the right tools that would substantially reduce the hiring time and aid in recruiting the right talent. Mostly HR would be procuring many tools that would be dedicated to each task along the recruitment process, but all we need is a powerful tool that would effectively manage the recruitment process from top to bottom. When a single tool can perform the task of 4 or 5 different tools, why choose many over one powerful tool? Practically, integrating many tools to work harmoniously is a tough task, so the solution to maximize your ROI is finding one powerful tool that integrates all your requirements.
The second step in maximizing ROI would be, you must be able to predict the software cost and not buy products that do not fit your needs. The best way to do this is not to fall into the trap that companies advertise. There are numerous competitors in the industry who would try to oversell the products on a fake pretext. Anticipating and avoiding those kinds of companies is the best way to maximize your ROI. these companies would offer you services at a price of 3X times the other company claiming to be an effective software platform. Exploring and analyzing the platform well before purchasing and comparing the features and cost of various features, would help in maximizing the ROI. Ideally, a good hire would be one where you would analyze many people for a single job.
Always opt for platforms that have transparency in their pricing, For instance with Xobin, when you can manage unlimited assessments at a minimum cost of 166$, why do you have to pay 2$/assessment, with this price you can cut down your recruitment software cost from 400$ to 166$.
Automate 1:1 interactions
Always save up the time taken for in-person interactions, which would consume the time of candidates traveling to the interview locations, and meeting the person who would interview them. XoForms cuts down this time taken by automating the interactions where the candidates can record a short introduction of themselves, along with answers to your predefined questions. This ideally reduces the time taken by 70% and cuts down the cost from 1100$ to 330%. The benefit of this is the candidate can structure their thoughts and present themselves more effectively, and the recruiter can have the liberty of reviewing the interviews at his/her convenience.
Eliminating unplanned expenses
The recruitment practices could be improved to eliminate these expenses, but it isn’t certain owing to numerous reasons.
Build a credible model
Building a standard model for evaluating and shortlisting candidates will help you in saving time and money in the process of recruiting. The candidate’s skill competencies and personality traits can be evaluated through multiple rounds of assessments and having a scorecard with a predefined value could help you in recruiting consistently which would avoid unnecessary bias. This would make your decisions data-driven rather than based on intuitions.
With the help of these multiple assessments, we would be able to assess the candidates in 360 degrees which would save you loads of time and also make your recruitment process effective. This is the only possible way to reduce the wrong hire, that Xobin’s customers over years have trusted and used.
Xobin along with XoFroms which has been already launched along with the video interview module is potentially the only platform that would offer you all the recruitment tools integrated into a single platform. The pricing is transparent and economical, where you can use Xobin at just 166$ to make your recruitment effective and maximize your ROI.