“Nothing we do is more important than hiring people. At the end of the day, you bet on people, not strategies.”
As very succinctly pointed by theex-CEO of General Electric (GE), the key contributor to the success of any organisation is its people, not just the strategies or the technology. But choosing the right people who fit in the culture of the organisation is greatly enabled by the hiring strategy and the underlying technology that eases the hiring process.
Calculating the return of investment or to say the value delivered by a recruitment software is not as easy as in case of a CRM platform or automation software. There are several non-quantifiable factors at play such as you can’t quantify the value that should be generated by a candidate for any role. But there are multiple factors to justify the investments made with recruiting software via identifying the benefits accrued.
For calculating the ROI, let’s take two companies – Company A & Company B. Both are identical in every possible way barring Company B uses Vega HR – an end-to-end Recruitment management suite, whereas Company A uses excel/spreadsheets and emails to manage their recruitment.
Before we dive into the numbers, we need to make some assumptions:
Company A: The recruiter here must go through a series of mail chains to collate the requisitions raised, deal with cumbersome emails.
No. of hours spent each week = 5X5 = 25 Hours
Hourly cost to company = $20
Total cost of hiring = 20X25 = $500
Company B: The recruiter here has a platform where all the information is stored in a single place. Most of the processes are automated, and he is not exhausted by the repetitive tasks. With Vega HR, recruiters are guaranteed to save more than 40% of their time.
No. of hours spent with RMS software = 25 X 0.6 = 15
Hours Total Cost of hiring = 15 X 20 = $300
Cost of the RMS Platform = $25 (Vega HR – Earth cost)
Total Savings = 500 – (300 + 25) = $175/month
This is the savings when you consider just one recruiter if yours is a large organisation the savings could be HUGE.
Annual Savings = $2100/recruiter
Hiring is a cumbersome process, it is like fishing, sitting on the bank of the river doesn’t guarantee you a good catch. Fishes have great nutritional value but not all are great (like catfish). Feeling confused?
To make matters worse, unlike fishing, there are multiple fishers (read recruiters) operating in the same space at the same time.
Finding the right fish is analogous to finding the right candidate for the job. Putting the opportunity to a prospective bright candidate at the right time, at the right place has the highest probability of conversion.
Coming back to our examples of Company A (without an RMS) and Company B (with an RMS).
Company A: With manual handling and screening of candidate profiles, the HR with Company A can go through only so many CVs. Comparing profiles and creating hotlist of candidates is bound to have some biases due to mental fatigue. Another challenge with this approach is with the sourcing of candidate profiles. Owing to the limitation of manual handling of profiles, the HR professional will only source CVs from 2 or 3 sources at max.
Company B: The HR Professional with Company B, uses Vega HR. The system offers ML-based CV parsing making life easier for the HR professionals. Besides, it uses AI algorithms to ranks CVs, eliminating any biases and making sure the process is as objective as possible. With integrations to leading job boards and social media channels, Vega HR offers a reach second to none. With Vega HR you can cast a wider net (reach) and hence gives a significant boost to the possibility of hiring the best candidate.
Cost of a Bad Hire: As per the US Department of Labour - the cost of a bad hire can reach up to 30% of the employee’s first-year earnings.
Putting this into perspective, let’s assume if the cost a company is paying to an employee is $20/hour (which could be way higher).
Calculating the annual cost to company = 20 ($/hour) x 8(hours/day) x 5 (days/week) x 4 (weeks/ month) x 12 (for a year) = $ 38400/ year
Net Loss on a bad hire = 38400 x 0.30 = $11520/year With Vega HR, a comprehensive recruitment suite, with a cost of just $25/month/user you can save a lot.
The Vega HR platform offers a very comprehensive set of suits to make sure you are hiring the best candidate. Let’s dig a bit deeper into how it reduces the bad hire probability:
These factors are very critical for any organisation to make sure they are following a good hiring strategy and identify any hiring bottlenecks. The recruiters at Company A will find it difficult to monitor each of these aspects related to a good hire.
Whereas, the recruiters at Company B, who are using a recruitment management system that offers capabilities like Advanced CV Parsing & Ranking, Interview Assistant, Job Portal and Social Media integration, CVs Database management (Blacklisted Candidate log) and much more, have significantly higher chances of landing a good hire.