Roadmap for the Perfect Recruiting Process, Part 3

In this article series we’ve been traveling down the recruiting highway talking about improving your recruiting process. We first talked about how to develop a recruiting roadmap, and then how to generate the numbers to help you analyze your process. In this article, we continue on with step five, where we really start to focus on implementing improvements in the overall recruitment effort ó mainly budgets and selection of technology. Step Five Imagine it is time to budget for next year. I have always viewed it as that wonderfully busy time of year we both love and dread so much. But hopefully, if you have taken the time to gather the data from steps one to four in this article series, you now have information that will make your job of estimating costs for hiring much easier. Third Party versus In-House As an example, if you know that your cost per hire is extremely high for third party recruiters but very low for referrals or the Internet, how do you get more people hired from the lower cost alternatives? A lot of companies lean on the third-party recruiters for any position higher than the administrative level, because it’s quick and easy to rely on them, and the internal recruiters just don’t have the resources to look through all the resumes they get online. There is absolutely nothing wrong with this model if money is no object and you don’t have the time or staff to manage the process yourself. Almost all companies will need to use third-party recruiters for certain high-level or very unique positions ó their existing candidate databases and ability to network can be extremely valuable for these types of very specific positions. But if you are trying to hire a common position like a sales manager, a third party recruiter may be an excessive route in terms of costs. Choosing the Right Technology By taking some of the dollars that you are allocating to third party recruiters and investing that in technologies that streamline your hours spent on recruiting, you will find that you can get many top-level hires using the lower cost of the Internet. I know what you are thinking, and yes it’s true ó selecting these tools will always be a daunting task. But remember this: no matter what anyone else says, selecting the right technology at the right price to help in your recruiting process is going to be different for every company because of their individually specific and unique needs. Selecting any specific technology for recruiting could be a book in itself and one that needs to be rewritten every six months. When you budget for, select and ultimately purchase any technology for recruiting purposes, make sure you do your homework. Don’t rely on what you read in marketing and sales materials; they are always focused on selling you their own solution. Do rely on your gut instinct, your own research, and research done by outside, non-biased groups or people. Even with external research data, make sure that you are comparing it from different sources. Ultimately, there is a reason that I talked about creating your process before buying technology. What I mean is, if a vendor says you have to change your process, one that you know works and that you are comfortable with, just so you can use their product, think twice. The best technology will be the one that changes to fit your process, not one that asks you to change for them. At a base technology level, you might be looking to include an automated job posting tool, a database sourcing tool, a predictive matching tool (for narrowing and ranking applicants) with a searchable database and a testing and assessment application. If you are like most companies, you may tend to overspend on technology and never end up using 50% of the functionality. Just because everyone else has an ATS or posting tool doesn’t mean you need one too. All told, you could be looking at just $50,000 for an entire year (obviously this could be more depending upon the number of hires and vendors that you select). If you spend $15,000 on average for a new hire, this investment will pay for itself after just four hires. I don’t know of any HR person who wouldn’t like to show the CFO how they can still hire top-notch employees at 30% or even 60% less than they have in the past. Other Process Improvements Realize too that your CFO is going to hold you responsible for the entire budget, including overhead, personnel, and technology costs. Your greatest savings may actually come from process improvements where recruiters and other staff are made more efficient. Thus, it may be beneficial to include those types of items in your overall cost per hire. As an example, let’s say that your company utilizes the four major sourcing options ó print, Internet, third party recruiters, and referrals. Additionally, you have a new ATS, well-negotiated career site memberships, an electronic means for tracking referrals against your database, and a contingency relationship with your top three external recruiting firms. When you have an open job requisition, you almost immediately have a handful of candidates from your external recruiters, the referral system, and even from the local newspaper ad. You may also get 200 resumes from the Internet. So where is the best candidate? Unfortunately, because of the time involved, too many companies today forego looking at the Internet resumes even though the best candidate might be in that group, and not the handful they have from the other sources. The point is not that the other sources are bad. The point is that by putting some of the money you normally spend on the other sources into a pre-screening and ranking application ó before or in conjunction with your ATS ó you can be evaluating the 200 resumes down to the top five or ten, right along side the resumes from the other sources, to get a listing of the top candidates, regardless of source. Once again, you are now able to allocate your budget dollars properly to get the best return on your investments from each resume source rather than continually spending the same dollars in the same areas every year. In sourcing candidates you do have a number of options. You can post a job on an Internet website, search an Internet career site resume database (or your own database), use a third party recruiter, place a print ad, or use an internal referral. Each one of these has a different cost associated with it that should be incorporated in developing your overall cost per hire. If you only use third party recruiters, you may feel that you save time and get good candidates. But how many of us have found out that the candidate the external recruiter presented had already applied to a job posting or been referred by a coworker and their resume was already in our ATS database! The essence of this concept is that you want to be able to provide your executives with a detailed spreadsheet of the number of hires you made from each source ó print, Internet, 3rd party recruiter and referrals ó and the costs associated with each of those. If 30% of your hires are coming from third party recruiters at a cost of 70% of your budget, and another 30% of your hires are coming from Internet career sites at a cost of 20% of your budget, you can immediately see how you can save money and lower your cost per hire: shift some budget dollars. Or, when the economy picks up and you are asked to hire 50% more people, you can do it with the same budget you had this year. Tell me your CFO won’t be impressed by that one! Too many companies today are abandoning, or at least lowering, their Internet recruiting budgets because they don’t have the people resources to handle the resume flow. They “are not hiring today” or they are trying to impress the CFO by not spending money, when the fact is, by shifting some budget dollars to really good technologies, you can still get the quality candidates at a reasonable cost per hire with your current headcount. And remember, even though you may not be hiring today the same number of people that you were hiring one or two years ago, you are probably still hiring, even if just for attrition. Using a good technology today will allow you to begin building a database for the future. This can eventually become your most cost effective source for new employees: those that want to work for your company and that you have kept in touch with over time. In the next and final article, we will really dig into the new ways of recruiting and how to make your company stand out in the process. These will be true out-of-the-box thinking ideas as it relates to recruiting ó not the standard “flavor of the month” consulting flim-flam. Stay tuned…

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Jeff Dahltorp ( is the director of global marketing and business development for TruStar Solutions, the leader in "creating exceptional hiring strategies." He is a regular contributor to notable industry publications and is a recognized speaker at tradeshows and events. His responsibilities with TruStar Solutions include overseeing the marketing department and developing new strategic alliances. Jeff has over 10 years of business experience in the area of marketing, sales, consulting, product development and product management.