For more than 10 years, there have been and appear various kinds of professional systems for recruiting personnel. It `s naturally. Specialized software has already been developed for many individual professions. As for recruiting, everyone understands what tasks the software helps to solve, what routine and mistakes it eliminates, but no one understands how to measure the economic effect of its use. In other words, companies can calculate how much money it will cost them to use software, but don't understand ROI or how much money the software will bring or save. Slogans like “Close vacancies 2 times faster with (such and such software)” are from a flashlight, it’s just not true.
Lack of understanding of what recruiting software gives in terms of money leads to the fact that companies postpone this investment for years and during this time lose a lot in results.
I decided to calculate how much money and time professional recruitment software saves. In order not to burden you with detailed calculations, I will start immediately with the results obtained. And for those who are interested in digging deeper, detailed calculations are described below.
So here are my results.
Using professional recruitment software you:
- save work time 2 months and 1 week per year for each recruiter.
- save money - equivalent 2,24 average recruiter salary per year. In April 2019, this is an average of $2 for an IT recruiter in Russia, $688 for Ukraine, $1 for Belarus, and $904 for Kazakhstan.
- ROI when investing in recruiting software is about Present in several = 390%.
- for complex, high-paying positions, the benefit for the employer will be on average from $ 2 to $ 184 per year per recruiter depending on the country;
- for lower-paid, fast-closing positions, the benefit to the employer will average aboutt $1 to $680 per year per recruiter also depending on the country;
- ~ every 5 vacancies the recruiter will be able to close using their database, which is 54% faster than when looking for new candidates.
Calculations
Get comfortable and let's get down to the details. I decided to break down recruitment “by the bones” in order to get a visual idea of what and in what volumes a recruiter has to do.
How software helps save 2 months and 1 week a year
On average, one recruiter spends about 1 hours processing 33 vacancy without using software. It wasn't easy to calculate. We interviewed colleagues, and also analyzed in detail the norms and standards in the profession.
To hire a qualified employee for an office position, you need to perform a certain list of actions, while some of them are one-time, while others need to be done daily. In most cases, it is possible to close a standard vacancy, if actively engaged in this, within a period of 10 days to 3 weeks. For calculation, we take the average value: 15,5 days. We will multiply all daily labor costs by this value. We will take the duration and number of individual actions from the standards established empirically by experts (for example, like here). For all calculations, we use the arithmetic mean of the minimum and maximum values - it is the closest to real conditions with the probability of various emergency situations.
Let's compare the time spent by one recruiter for each recruitment stage without software and using software, and calculate the real savings.
If we add up the duration of all the individual elements of the recruiting process (calculated by average values), it turns out that the hiring specialist spends almost 32 hours and 48 minutes on the “manual” selection of one employee. Having calculated the time spent on closing the same vacancy, but using the system's capabilities for recruiting, the time for all the necessary tasks was reduced to 28 hours and 24 minutes. That is, the closing of 1 vacancy is accelerated by 4,4 hours.
According to statistics, a recruiter processes an average of 5 vacancies per month. Using the software at the same time, he receives a very valuable bonus - this is a "pumped" internal resume database. Of course, closing vacancies from the internal database is much faster, this is a dream. I decided to find out how many such accelerated hires are obtained and for how long.
To do this, we obtained data on closed vacancies in the CleverStaff system for 2 years. It turned out that on average 4 out of 5 hires are new candidates, and every fifth hired employee is a candidate from the internal database, and such vacancies are closed 54% faster. On average, there is a saving not previously received 4,4 hours, but already 15,3 hours.
Go ahead. If a specialist works standard 176 hours per month, then the total savings in working time is:
(4 jobs × 4,4 hours) + (1 job × 15,3 hours) = 32,9 hours per month.
32,9 hours savings / 176 working hours per month = 18,7% of working time per month.
On a yearly basis, this is:
18,7% × 12 months = 2,24 months or 2 months and 1 week
This indicator is universal and applicable to the work of a recruiter in any country and with vacancies of any complexity. Let's see: what causes such a reduction?
This is possible due to the fact that professional software optimizes such time-consuming processes:
- Posting a vacancy — the system itself generates an external vacancy page from the data entered into the database. If you add a link to the external page of the vacancy generated by the software to the text of a vacancy posted on a special resource, job seekers will be able to respond to the vacancy directly on it, which is convenient, because. responses immediately enter the system, and their resumes enter the database.
- Saving all suitable resumes from the candidate database of the job search site. Professional systems have integration with the most popular employment platforms, which means that users can add candidates from these resources to their own database in 1 click, i.е. right in the process of screening search results.
- Saving resumes of applicants who come daily to the mail and accounts on the sites for posting vacancies. Parsing resumes from mail is carried out once a day. If a link to an external job page generated by the system is added to the description of a vacancy on third-party sites, candidates will be able to send their responses from it, i.e. be immediately added to the database and appear in vacancies at the “Found” stage.
- Rejection notice for unqualified candidates. With the help of software, this can be done directly from the system interface: the system itself will substitute the name of the candidate into the template.
- But the main thing is the formation of a working base of candidates, due to which an experienced recruiter will be able to fill vacancies without external sources.
And how much money?
Everything related to financial indicators can vary significantly. The salary of both the recruiter himself and the candidate he is looking for depends on the country, the size of the company, the budget of the department. Therefore, here I turned to the average indicators that are usually found in professional studies. So, according to statistics, the average salary of a Russian IT recruiter per month is $1200. In turn, the average salary of a Ukrainian IT recruiter per month is $850 (according to ), Belarusian - $750, and Kazakh - $550. Hereinafter, I took all data on wages from publicly available vacancies on such resources as hh.ru, hh.kz and the like.
I correlated this figure with the savings in working time - 2 months and 1 week per year (that's = 2,24 months) that we received earlier.
- For Russia — $1200 × 2,24 months= $ 2
- For Ukraine - $ 1
- For Belarus - $ 1
- For Kazakhstan - $ 1
These amounts are the average savings on the salary of each recruiter per year. To be more precise, for such an amount, the recruiter does additional work if he uses a professional system.
Additionally, you can also calculate the benefit for the employer from additional hiring, which is equal to the lost profit from hiring 1 month later. We will assume that the company earns 50% of the amount of his salary from the work of an employee. I think this amount can not be less, taking into account taxes, rent and other expenses. Therefore, I think 50% of the salary is a modest, minimum estimate of how much the company earns from the work of an employee.
Now let's calculate how much is 50% of the average salary fund of hired employees for 2 months and 1 week. According to statistics, the average salary of a senior IT specialist is 〜$2 for Russia and 〜$700 per month for Ukraine, 〜$2 for Belarus and 〜$900 for Kazakhstan.
1 recruiter closes 1.5 difficult vacancies per month on average.
We calculate the benefit using the following formula: average salary × number of vacancies per month × 2.24 months × 50% benefit.
- For Russia: $2 × 700 jobs per month × 1.5 months × 2.24% benefit = $50
- For Ukraine: $4
- For Belarus: $4
- For Kazakhstan: $2
In total, for complex, high-paying positions, the amount of benefit is from $2 to $184 per recruiter per year.
The average salary of a specialist for a position that closes quickly is approximately $540 for Russia and $400 for Ukraine, $350 for Belarus and $300 for Kazakhstan. The recruiter closes about 5 such positions per month.
- For Russia: $540 x 5 jobs per month x 2,24 months x 50% benefit = $3
- For Ukraine: $2
- For Belarus: $1
- For Kazakhstan: $1
In total, for less paid, quickly closed positions, the amount of benefit is from $1 to $680 per recruiter per year.
Let me remind you that I summarized the results at the beginning of the article.
Does your company need recruiting software?
This is a purely business issue. It is better to make a decision not intuitively or emotionally, but based on data. I propose using an example to calculate the amount of benefits from the introduction of software for a team of 4 recruiters. For example, two with salaries of $700, one with 850 and another with $1100. The monthly salary fund of such a team is $3.
For example, the software costs $40 per month for each recruiter. This is quite a market option.
For the year, the cost of software is 40 × 4 × 12 = $1.
According to my calculations above, the software will save 2 months and 1 week per recruiter per year. For our team of 4 recruiters, this will be exactly 9 months (out of a total of 48 working months per year).
The amount of savings in money per year is the monthly salary fund of the team multiplied by 2 months and 1 week:
- $3 × 350 = $2,24
Here it can be argued that 4 people with or without software receive their entire salary and there will be no savings. In fact, 9 working months of savings for your company will mean one of the following scenarios:
- 4 recruiters fill more positions, as if they were assisted by the 5th recruiter for 9 months of the year.
- The load per recruiter is reduced and you only need 3 recruiters instead of 4.
That is, with the software, 4 recruiters will perform $7 more work per year. If you don't have that extra job, then you're cutting one recruiter and saving $504 a year. If you have enough vacancies for them, then you save $7 per year by not hiring a 504th recruiter, and his work is done without increasing costs.
ROI = Savings / Investment (software costs) = 7 / 504 × 1% = 920%.
In other words, in our example investments in software will be repaid 4 times within 1 year.
For your company, you can repeat my simple calculations by substituting:
- Your number of recruiters,
- Their annual payroll,
- The amount of costs for your recruiting software,
- Average time to close a job in your company,
- Average number of vacancies closed per month.
In my estimation, if your recruiters are well loaded with recruiting, then with different values of these variables, ROI can be in the range from 300% to 500%.
You can also estimate the value of hired employees for 2 months and 1 week to each recruiter. According to my calculations, this increases the ROI by up to 2,5 times.
The use of professional software by recruiters is no longer a controversial issue or a dilemma. This is a global trend, which will include all serious companies sooner or later.
I hope my calculations and results will help your companies decide on professional recruiting software and it will pay off for you no less than in my calculations 🙂
Author: Vladimir Kurilo, founder and ideologist of a professional system for recruiting.
Source: habr.com