`While 62% organizations admit they are making hiring mistakes, 53% blame it on lack of proper tracking mechanisms.
May 3, 2016: Businesses are often worried about the expenses they make on recruiting and then losing an employee even as a majority confess to picking wrong candidates, reveals a new TimesJobs.com study on usage of HR metrics for gauging the return on investment (ROI) on hiring.
In the study, 62% organizations said they are making hiring mistakes and 53% blame it on the lack of proper tracking mechanisms and measurability.
The problem lies in the chunk of resumes recruiters receive every day and the pressure to fill a position within a deadline. The stress makes most (78%) recruiters spend less than five minutes on reviewing a resume, finds the TimesJobs study. In the process, recruiters also make mistakes – such as unclear job descriptions (55%) and ignoring the cultural fit of a candidate (40%).
The value of hiring ROI
Focusing on hiring ROI is a useful way to identify these loopholes and check and modify recruitment practices based calculations and analysis of the ROI report.
Hiring ROI is set to become the benchmark to assess the success rate of hiring. However, it is still a vague statistic for many – 90% employers state it is difficult to determine the average cost of hiring an employee, the 10%, who think it can be measured, claimed in the study that it requires a lot of money/resources to measure.
“The TJinsite study reveals that there is still tremendous scope for optimizing the hiring processes in India Inc. Over 400 hiring managers have claimed a lack of tracking mechanisms to measure hiring ROI but I feel it is rather a lack of awareness – because they haven’t been able to decode the metrics already available within their HR Departments,” says Nilanjan Roy, Head of Strategy, Times Business Solutions.
Identifying the investments
To begin with, organizations must be clear about the internal and external investments of both time and money on hiring. According to the TimesJobs study, the key internal investments in hiring include interviews, background and reference checks and onboard training.
The external investments include cost of job postings, paying for consultancy services (if opted for), employee referral payouts and cost of relocation (in specific cases). Once the internal and external investments are identified, it is easy to recognize and decode the key metrics to measure hiring ROI.
Top nine metrics to measure hiring ROI (according to the respondents):
Time to hire – 42%
Sourcing channel – 40%
Cost of hire – 36%
Quality of hire – 30%
Retention – 32%
Open vacancies vs. positions filled – 25%
Offer to acceptance ratio – 21%
Application completion rates – 18%
Internal vs. external hires – 13%
ROI of new hires
To determine the incremental profit contribution of a new hire, the organization should multiply the revenue per employee by the variable profit margin, says S. Sundararajan, director, i-exceed. “You will get the average profit contribution expected for each new employee. This can be adjusted for salary by dividing average profit per employee by the average compensation.”
To avoid reduced hiring ROI, Chaitrali Singh, director of human resources at ZS India, says the talent acquisition team must ensure it understands the candidate’s career goals and recheck whether they match with the profile requirement. “The candidate may be looking for stability, money, growth, excitement or even a purpose. A firm must assess whether what they say in person is in sync with the achievements and career goals listed in their resume. Above all, every new hire needs to be a perfect fit for the firm culture.”
TimesJobs conducted this study across 807 pan-India employers. The complete report can be downloaded from: http://content.timesjobs.com/docs/TJinsiteApril2016.pdf
TimesJobs.com, India’s leading career and recruitment portal, is one of the best-selling online ventures of the Times of India Group. Conceived and launched in 2004, TimesJobs.com currently has a candidate database of more than 25 million registered job-seekers across levels and functions who clock-in over 60 million page views a month.
TimesJobs.com is positioning itself as an engagement platform and knowledge resource for insights, information, analysis and opinions on the recruitment market. Well-known for its product innovations and unmatched deliverables, TimesJobs.com has pioneered the platforms of:
– JobBuzz.in for candidate engagement with company reviews and ratings
– TechGig.com as India’s leading IT network for careers, coding and competitions
– StepAhead for career assessment and enhancement services
– RecruiteX as the definitive demand and supply recruitment index
– The TJinsite knowledge series and a lot more.
TimesJobs.com serves a corporate customer base of more than 25,000 clients from across the globe. It has been serving clients like HCL, IBM, Yamaha, Godrej, HSBC, Mahindra, Bajaj Allianz, TCS and Thomson Reuters to name a few.