RETURN ON INVESTMENT (ROI) OF ONLINE APPLICANT TRACKING SYSTEMS

Digital hiring management systems (or applicant tracking systems) are yielding quantifiable return to corporations that have invested in such systems, whether these corporations have deployed them internally or chosen the hosted options accessed on the internet. The Aberdeen Group has reported first-year hard cost savings of up to $15 million, dependent on the size of the company and how much hiring activity it had during the year.

Corporations are currently looking at time-to-fill and cost-of hire as metrics of interest, however also being concerned of the quality of their workforce. It is more economical to keep a good employee that to try and find another. High employee turnover adversely affects the bottom line. Therefore hiring the right person first time is as important as the decrease in time to fill the position and the cost of sourcing candidates. The business process of online hiring management demonstrates many points of hard cost savings.

Cost of Hiring

Hard costs within the hiring process are internal and external to the organization. The internal costs include labour as all aspects of the process – the location of candidates, reviewing of resumes, telephone interviews, live interviews and paperwork correspondence – are all time intensive. Such paper-based operations between a hiring company and candidates for positions can be very costly on a large scale. The external costs include newspaper and external job board advertising of vacancies, the use of recruiting agencies or staffing companies, and the use of third parties for background checking and drug use testing.

There are also variable costs in the hiring process. The effects of time in the hiring management process have two aspects, firstly, while the job position is vacant there is no work accomplished, and this “cost of vacancy” is a very real although difficult to measure cost to the company, and secondly, the cost referred to as “time to fill” is the elapsed time between the posted requisition and the filling of the position. The longer the time the vacancy remains unfilled, the greater the cost of the vacancy.

Where savings occur with online hiring management systems (Applicant Tracking)

• The use of the internet with a careers site or e-recruitment system, serves to promote corporate branding and capturing candidates – both for the posted positions and for a talent pool for the future.
• The ability to electronically provide a prospective employer with resume saves the candidate cost and the recruiter cost of time as the recruiting software or hiring management system has the ability to search through the large pool of resumes and filter out all but those that list skills matching the position.
• Operational efficiency in the hiring management process is achieved through workflow and collaborative technology providing infrastructure of hiring management solutions. The technology serves to alleviate peripheral costs, such as resume scanning, paper file storage and manual distribution of candidate information to the hiring managers.
• Business’s have reported savings in labour costs and in the mechanics of managing the hiring process.

Traditional hiring practices have tended to be highly manual, inefficient and time consuming. The processes have been costly with the goals of hiring initiative often unmet. The ROI from online applicant tracking software or e-Recruitment software is gleaned from the greater efficiency from automated hiring management, such as the ability to meet hiring goals with a smaller staff.

Additionally, there is the overall economy of the hiring solutions, which allow for decreased reliance on expensive of inefficient sourcing. Such savings combine with savings derived from internet careers sites of companies providing “free” candidates and enlarge the talent pool for ready access in the future.

The Aberdeen group concluded that the use of electronic hiring systems such as HRsmart have an immediate and ongoing effect on cost savings and corporate efficiency in facing the challenges of recruiting and hiring a talented workforce. All surveyed companies reported savings and improved practices which were more consistent, efficient and effective than either their previous manual processes. Companies showed total first-year savings of up to $40 million, including both hard and soft costs, with all companies recognizing a positive return on their hiring management investment.

Source: Jones, K. 2004. The E-recruiting Payoff: The ROI of Online Hiring Management Systems. Aberdeen Group.