Many recruiters know what issues recruitment programs can solve and how much it will cost. But the companies themselves do not always understand the savings and ROI from their implementation, they postpone the investment and lose in performance. So how do you actually measure and predict the economic impact of using ATS for recruiting? In which way and how fast does such an investment pay off? Volodymyr Barkhat, founder and CEO of CleverStaff, offers his own method of calculation.
In the course of calculations, it turned out that if a recruiter actively uses software, then
- saves 20% of hire time or 2.4 months per year;
- savings – equivalent to 2.4 average salary of a recruiter per year;
- ROI when investing in software is about 325%;
- 〜every 5 vacancies are filled by the recruiter using their database (which is 54% faster than when searching for new candidates).
Let’s take a closer look at the calculation logic.
How real is it to save 10 working weeks a year?
33 working hours on average, that is how much a recruiter spends on processing one vacancy if he/she does not use recruiting software. It may take him/her from 10 days to 3 weeks to fill a standard vacancy. On average – 15.5 days. We will multiply all daily labor costs in the table below by this value. Thus, we will compare how much time a recruiter who works without an automated system spends on the selection stages, and a recruiter who uses it.
Attention! We will take the number and duration of actions from the standards established empirically by recruiters. For all calculations, we use the arithmetic mean (to take into account the non-standard situations).
Summing up the time of all stages, we will see that the recruiter spends almost 32 hours and 48 minutes on the “manual” selection of one employee. If he/she uses software – 28 hours 24 minutes, thus accelerating the filling of 1 vacancy by 4.4 hours.
We move on. On average, a recruiter processes 5 vacancies per month. Automation gives him/her a “handicap” – a “pumped” internal resume database. The data on closed vacancies in the CleverStaff system shows that every 5th “newly hired” employee is a candidate from the internal database, and such vacancies are filled 54% faster. Therefore, the recruiter saves not 4.4, but 17.7 hours.
If a recruiter works the standard 176 hours per month, then the total savings in working time is: (4 jobs × 4.4 hours) + (1 job × 17.7 hours) = 35.3 hours per month. 35.3 hours savings / 176 work hours per month = 20% work time per month.
Yearly projection: 20% × 12 months = 2.4 months. Or – 10 working weeks a year.
|Stages of recruiting||Expenditure of time without system||Expenditure of time with system||What contributed to economy|
|Write a description and requirements for the vacancy||~ 37,5 minutes||~ 20 minutes||In the system it is possible to get a vacancy from the archive and re-place it, if such positions have been opened before|
|Determine the competitiveness of wages on the market||~ 35 minutes||~35 minutes|
|Posting a vacancy on your website and third-party websites||~ 37, 5 minutes||~ 20 minutes||In the system it is possible to get a vacancy from the archive and re-post it, if such positions have been opened before|
|Search for candidates on job sites||~ 37,5 minutes||~ 37,5 minutes|
|Quick view of every resume found on job sites (~ 400 resumes)||~ 0,6 x 400 resume||~ 0,6 x 400 resume|
|Sorting and storage of the selected resumes in thematic folders||~ 25 minutes||0||Integration with popular job search platforms allows you to add candidates to your own database in 1 click simply in the process of screening results|
|View of one resume submitted by the candidate (~ 15 resumes)||0,6 minute х 15 resumes х 15,5 days||0,6 minute х 15 resumes х 15,5 days|
|* 15.5 days – in most cases you can fill a standard vacancy within 10 days to 3 weeks, if you are actively engaged in it. For the calculation, we take the average value of 15.5 days. We will multiply all daily tasks by it.|
|Sorting of the received resumes and their storage||~ 10 minutes х 15,5 days||0||The software allows you to quickly download mass resumes from mail, archives and other sources|
|Email correspondence: interview invitations, test assignments, etc. (~ 10 letters)||~ 2 minutes х 10 letters х 15,5 days||~ 2 minutes х 10 letters х 15,5 days|
|Phone calls to the candidates (on average 4 calls)||~ 4 minutes х 4 calls х 15,5 days||~ 4 minutes х 4 calls х 15,5 days|
|Phone calls from the candidates (average 4 calls)||~ 2 minutes х 4 calls х 15,5 days||~ 2 minutes х 4 calls х 15,5 days|
|Primary interviews (~ 10 candidates)||~ 40 minutes х 10 candidates||~ 40 minutes х 10 candidates|
|Repeated interviews (~ 3 candidates)||~ 45 minutes х 3 candidates||~ 45 minutes х 3 candidates|
|Verification of recommendations||~17,5 minutes||~ 17,5 minutes|
|Notification of all applicants on filling of the vacancy||~ 40 minutes||0||Simply from the software interface in 1 click the system will substitute the name of the candidate in the chosen template|
|Total||1971,5 minutes = 32 hours 48 minutes||1706,5 minutes = 28 hours 24 minutes|
What exactly helps to save money?
Savings begin where routine processes end or at least are minimized. They are the main time wasters. In turn, the recruiting system optimizes work at all “routine” stages. Here are some of them, such as
- publication of vacancies and saving of resumes. The system itself generates the external page of the vacancy from the data entered into the database. If you add this link to the text of a vacancy posted on a profile resource, then applicants will be able to apply for a vacancy directly on it – the responses immediately enter the system, and their resumes enter the database, and appear in the vacancy at the “Found” stage;
- saving of the relevant resumes from the candidate database of the job site. Professional software has integration with these platforms, so users can add candidates from them to their database in 1 click;
- saving of resumes. Parsing of the resumes from mail is performed once in 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. immediately added to the database;
- notification of rejection of candidates who did not fit can be done directly from the system interface;
- formation of a database of candidates, due to which the recruiter will be able to fill vacancies without external sources.
How to calculate ROI from software implementation if there are 5 recruiters in the department?
A recruiter’s salary depends on many “variables”: country, company, department budget, etc. So, according to statistics, the average monthly salary of a Ukrainian IT recruiter is $850 (EvoTalents). If we correlate this figure with the savings in working time – 2.4 months per year, then the average savings on the salary of each recruiter per year can be $ 2040.
So, we have 5 recruiters with a salary of $850. On average, the software costs $40 per month for each of them. Total per month is $200.
From the calculations above, we remember that automation saves 20% of the time. For a team of 5 recruiters, you save exactly 1 month of work, which costs $850. The cost of this savings: 850 – 200 = $650.
|In fact, 1 month of the recruiter’s time saving can be used as follows:
● either 5 recruiters fill more vacancies, as if they were assisted by the 6th recruiter;
● either the load of each recruiter is reduced, and 4 recruiters, instead of 5, are enough for you.
And now ROI=Savings/Investment (software costs) = 650 / 200 × 100% = 325%. Thus, investments in software will recoup 3 times within 1 year.
For your company, you can repeat these calculations by substituting your number of recruiters, monthly payroll, the amount of costs for recruiting software, and the average time to fill a vacation. According to CleverStaff, with different values of the variables, ROI can range from 240% to 410%.
This data indicates the most important thing: in order to be competitive, a recruiter needs to delegate data preparation/processing, an organizer, analytics, and other routines to software. After the introduction of automation, the result is visible after a few months and quickly pays off. We hope that the calculations above will help those who are still “thinking” and will once again convince those, who already use automated systems, of the foresight.