Recruitment Management System - Finding the ROI on Recruitment

Introduction:

I did mention in my previous write-up that recruitment is a challenging job in KNOWLEDGE based industry, whether it is IT or ITES/BPO or Service Industry. Also, in one of my earlier mails I mentioned about "Performance Management System", this time round, it is "Recruitment Management System". Did you ever felt the need of it? Every year, a company spends millions on recruitment, but what is the result?

"According to the Corporate Advisory Board of Washington DC, the cost of replacing staff can be anything between 50% and 175% of that persons annual salary and, as we are all aware, employees in the new millennium do not stay with a company for life as perhaps their grandparents did."

Before proceeding further, I like to share some facts about recruitment, probably known to you, in a survey it has been found that -
38% of organizations produce no reports on recruitment activity whatsoever and are therefore unaccountable for the time and spend involved.

77% measure Cost per Hire (CPH) in some way or the other. The largest number favored the Staffing/Cost Ratio 52% of those that measure CPH make no differential between discipline or role rendering the CPH figure relatively meaningless Easily measured hard costs were most usually tracked (e.g. agency fees) Measurement of soft costs (e.g. management time) was rare

66% measure Speed to Hire (STH) in some manner Most common start point was vacancy sign off Most common stop point was start date - potentially very misleading due to different notice periods or other factors which determine the actual start date. Very few track the whole process consistently making it very difficult to pinpoint bottlenecks This lack of tracking exposes organizations to potential legal challenge

58% have some Customer Satisfaction measurement Of these, 77% measure only 'overall satisfaction', again making it difficult to address specific issues Only 10% use Service Level Agreements (SLA)

Only 54% have some measure of Quality of Hire, potentially the most important metric of all The most common measurement was the appraisal process - unfortunately whilst this is entirely appropriate for specific organisations it does not help promote standardisation across industries Most analysis is made against people at the same level leaving no room for an assessment of speed of progress to that role

Only 8% have any form of competitor benchmark Process measurements, which focuses on quantity (number of CVs) rather than quality (shortlist, initial CV rating against the job specification, hire ratios to CVs). Again lack of logging of critical process details leaves organizations potentially exposed in any legal action and indicates widespread non-compliance with Data Protection Act requirements.
Lets start with existing recruitment sequence/procedure:
Identify vacancy
Prepare job description and person specification
Advertise
Managing the response
Short-listing
Visits
References
Arrange interviews
Conduct the interview
Decision making
Convey the decision
Appointment action

The recruitment process for most organizations is designed along the same path; applications are received, either via an online application form, a postal form or a CV. Candidate are short-listed and invited for interview. The interview format can vary considerably, as we discuss later, and can include assessment centers. The number of interviews also varies. Some companies are satisfied after just one interview whereas others will want to bring back a further shortlist of candidates for one or more interviews. If you are successful at the interview stage you will receive an official letter offering you the job. This information describes what you can expect at interviews and assessment centers, and takes you through to making a decision about any offers that may result.

When considering whether or not to invest, most of us ask perfectly sensible questions like: "What will the return be?", "What's the risk?" and "How quickly will I get the returns?" Would you put your hard-earned money into high-risk investment schemes without knowing about their past performance? Would you invest with professionals who are very thorough, but who can't prove that their methods deliver business results? At the end of the day, the organization is interested in knowing the return on recruitment investments and HR Manager/Recruitment Manager is responsible for it and hence can be questionable. I remember, once someone asked me, how HR department can become "Earning Department", it is only by saving costs and saving expenses.

As organizations, one of the biggest investments we will ever make is in recruitment. Fortunately, as HR professionals, we can all prove that the business is getting outstanding returns on this investment. We can point at the money spent, and put intelligent estimates on the financial and human benefits accrued. We can show that our recruitment processes deliver outstanding performance, control costs, increase sales, maintain efficiency and develop the organization. We do not employ poor performers. The confidence of the business in what we do is exceptional, and we are perceived as being directly pivotal to the performance of the whole organization. Our credibility is beyond doubt.

That would be a wonderful position to be in, wouldn't it?

How many organizations expect sensible questions about the return on recruitment investment to be answered? The truth is that very few really do. Recruitment is evaluated on the basis of the speed with which positions are filled the feedback from participants and the percentages of candidates who end up being employed. Very few organizations expect that the true impact on business performance can ever be proven, or recruitment processes fine-tuned to deliver precisely the business benefits required. Instead, recruitment is allowed to carry on without anyone ever knowing if it is delivering the goods, or if opportunities are being missed.

Because recruitment is not an exact science, it is allowed to continue (often very thoroughly) without proving its true value.

But is it really so unrealistic to believe that we can measure the business impact of different approaches to recruitment? More and more organizations are asking these questions, and the ones who can respond effectively are achieving surprising business results through their HR functions. A wide range of organizations in western countries, have invested in examining the business success of their recruitment practices, and achieved clear returns. Organizations are starting to find that, with some skill, it is possible to assess the return on investment. It is possible to define the business benefits required, and track the results. This is not just a bean-counting exercise aimed at proving that we are right - it points the way to improve results, and deliver business performance through HR.

What should a Recruitment/Hiring Manager do to calculate the return on investments on recruitment?
Start off with a clear analysis of the organizational and commercial outcomes required from recruitment. What is the business trying to achieve, and what part will successful candidates need to play?
Develop clear ways of tracking and measuring these outcomes
Carry out an objective and open-minded analysis of the qualities people need to perform. Ruthlessly avoid your judgement being colored by past practice or "knowing what works from experience". if doing this well seems expensive in the short run, it's never as expensive as doing it badly in the long run!
Ensure that you assess the full range of qualities needed for success - include personality, motivation and aptitude as well as experience
Ensure that everyone involved in recruitment is trained to the highest possible standards
Carefully connect recruitment to induction, training, management and performance management - to ensure that the business does not just get the right people, but nurtures and capitalizes in them as well
These approaches deliver returns of investment because
They identify people who perform,
Reduce the risk of employing people who cannot (or will not) perform,
Cut the costs of recruitment and development, and
Play a major part in driving forwards organizational change.
In common with all people processes, recruitment is there to deliver tangible human and business benefits. Devoting a little time to considering the return on investment is not a nebulous luxury - it is essential to delivering the results the organization needs. It is also a powerful way of positioning HR at the heart of the business. You will not regret

The need to have RECRUITMENT MANAGEMENT SYSTEM, its importance in streamlining recruitment process and calculating the RETURN ON INVESTMENT.

As we are in 21st century, which is being governed by INFORMANTION MANAGEMENT SYSTEM and wherein we are talking about SYSTEMS, be it Performance Management System, Compensation and Benefits Management Systems etc, we also have RECRUITMENT MANAGEMENT SYSTEM, hope you all knows about it.

Technology has ushered in new ways of thinking about and executing on talent attraction, selection, and acquisition.
Applicants can be processed more efficiently and with greater care.
Candidate relationship management, once reserved for top-tier professional applicants, can be realized across every level of job seeker.
Proprietary talent communities provide companies with opportunities for targeted marketing and can ultimately reduce time-to-fill and cost-per-hire while increasing the value of the employment brand.
These benefits provide a foundation for talent management to be in play at a broad and individual level.

Don't be mistaken. If the biggest pain point in your recruiting process today is that you have no way to track applicants electronically.

For most recruiters, a basic applicant tracking system, even if it starts as an Excel spreadsheet or Access database, is a key to survival and certainly to efficiency. If anything, the urgency to implement even a basic system has only increased in the past few years, as the Internet has made it so easy for candidates to apply for jobs. If you don't have an automated way to capture and search for candidate information, your job is going to be defined by performing administrative tasks that consume a significant portion of your available time-time that could almost certainly be better spent on higher-level activities. The good news is that if you're just getting started with applicant tracking, there are many good systems available today to fit almost any budget.

Recruitment Management picks up where applicant tracking left off. Tracking your applicants efficiently is no longer a self-sustaining hiring process and you will inevitably start focusing on the following areas to raise your recruiting process to the next level:

Tight integration between the hiring management system and corporate recruitment site. This is key because it is the basis for ensuring a consistent and positive job seeker experience, and the most visible aspect of the online employment brand interface. The hiring management system needs to support the integrity of the company's brand first and foremost - which, depending on the company, plays out at varying levels of complexity. An intuitive, flexible interface, supported by data capture, provides insight into the job seeker and drives the overall effectiveness of the system.
Engaging above-average talent by providing a streamlined and user-friendly online application process-one that candidates tell you is better than your competitors'.
The ability to seamlessly pre-screen candidates by asking job-specific questions in addition to collecting their resumes. This component should also add value to the applicant's experience while supporting recruiter productivity. If done well, a well-thought-out approach integrated in to your Hiring Management System can serve as a self-screen or job preview.
The ability, at a glance, to see how a candidate fits with the job he or she has applied for, individually and in comparison with all other applicants.
Making it easy for your recruiters to communicate and build relationships with candidates throughout the recruiting process.
Additional recruiter productivity enhancement tools.
The ability to extract data from your system to make decisions that support continuously improving your recruiting and talent attraction process.
Conclusion:

At the end, I like to say that HR professional is having a big responsibility to hire a best person from the available talent pool. At the same time, one needs to be cost conscious. It is a good practice in recruitment to be objective and seek to identify the candidates' abilities. Judge on individual merits and set the same standards for all. Whereas generalized assumptions made about ability or ambition, based on applicant's sex, caste, age, religious belief, sexual orientation or any disability, is a bad practice. One need to use the technology, to get the best results from recruitment process.

Sanjeev Sharma
(+91-98852 00259)
(Secunderabad-India)