This is part 2 in a two-part series on hiring friction and recruiting metrics. Click here to read part 1.
Hiring Friction’s Overall Impact On the Organization
A bad hiring process has an impact that goes far beyond the candidates it interacts with, though. It reduces the productivity of your hiring team overall, as well as every team that’s waiting on new hires to join them. Let’s think back to the reasons that time and cost to fill balloon: poor communication resulting in missed steps and compliance problems; uninformed decisions resulting in restarting the hiring process or dragging the whole thing out too long. The opportunity costs stemming from friction in the hiring process are some of the biggest, but perhaps hardest to understand.
Top candidates can find new jobs quickly, but it might surprise you just how quickly. Most have made a decision about your organization – whether to wait for or accept an offer – within 10 days. With them, they take the potential value of new top performing candidates, who are 10 times more productive than average employees and have a much higher ROI. [do you want a chart on calculating the value of top candidates here?]
The other opportunity cost is felt within your existing hiring team and organization. An inefficient and ineffective hiring process makes it harder to hire, bogging you down in details and errors. Rather than focusing on your short and long-term strategies, everyone from your recruiters to hiring managers to other affected team leaders is busy with damage control. You and your team are operating in the weeds instead of building long-term goals, strategies, and plans.
How Unfilled Positions Impact the Bottom Line
The cost of unfilled positions can’t be ignored. It costs the US economy $160 billion a year. While the costs for your company are undoubtedly smaller, they’re still likely to be punishing.
To calculate the cost of unfilled positions, you’ll first need to figure out average revenue per employee. For sales employees, you can use an average of their billings to get a sense of what value is being lost, but the value of other types of employees isn’t always clear. Let’s start with a simple average: Annual Revenue Per Employee = Total Annual Revenue / Number of Revenue-Generating Employees. Don’t forget to divide this by 365 to get a rough daily revenue estimate.
Daily revenue is especially important in demonstrating how hiring missteps and bottlenecks that seems small can have a big impact for the longer term.
Another HR and recruiting metric, that helps to uncover and drive discussion around hiring friction is: Revenue Lost Per Day Unfilled Position = Daily Revenue Per Employee x Days Unfilled. Don’t forget to multiply this by the number of unfilled positions to get a rough total daily loss estimate
Comeet helps you solve these problems by making it easier for your hiring team to prioritize important tasks and communicate internally, as well as keep track of these metrics and more in the long-term. Metrics and formulas are only useful when a baseline and trends are established. The value these metrics and reporting can bring can be measured through the top candidates you can bring to your organization. This is why understanding hiring friction is important and worth pursuing, and so is the value of a more effective hiring team.
This is part 2 in a two-part series on hiring friction and recruiting metrics. Click here to read part 1. Learn more about Comeet’s collaborative recruiting platform. Click here to register to join our upcoming demo.