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31 January 2017

Recruiting CRM Return on Investment

Posted by Team Talemetry

There are many ways to measure the value of candidate relationship management software, the most valuable is recruiting CRM return on investment (ROI). We generate a lot of great information about best practices for recruiting CRM, but let's talk about dollars and cents.

When it comes to CRM, one of the main long term strategies is to centralize all your past applicants and employees (internal talent) with your external talent sources (resume databases, social networks, email campaigns, job boards, etc.). If your CRM is set up accordingly, you can begin to measure cost efficiency over time by tracking some basic metrics and understanding core recruiting measures.

Because CRM doesn't begin reducing cost per hire right away, one method for evaluating CRM ROI is to start with a baseline cost per applicant model. Add up your historical hard and soft recruiting costs for the previous year and divide it by the number of applicants you acquired. This is your CPA.roi_s.jpg

A 2014 Bersin & Associates study pegged cost per hire at almost $4,000. Similarly, a 2016 study by SHRM showed an average cost per hire of $4,129.

So if you don't have access to all your recruiting costs, your can create a baseline by taking the number of hires you made in the previous year and multiplying them by $4,100 (average cost per hire benchmark). Then divide this number by the number of applicants for the previous year and you have a benchmark CPA.

Recruiting CRM expands beyond access to applicants and adds candidates from other sources like talent networks, sourcing databases, social networks, events, etc. Without CRM, many organizations have no way of understanding the total number of potential applicants and candidates they have access to. So along with applicants, you now can begin to measure cost per candidate (CPC).

Now, with cost per applicant, cost per candidate, and cost per hire, you can measure CRM ROI in a multi-faceted way:

Cost per Candidate

Our clients typically come close to doubling the number of candidates in their CRM in the first year and experience 10% monthly growth over time. This is because CRM, combined with federated searching and sourcing, gives all their recruiters access to a centralized talent pool AND access to external databases for sourcing. And each time a new candidate applies through the ATS, the record gets synced to the talent pool for future sourcing, further increasing the growth of the number of candidates.

With these growth numbers you can expect that your cost per candidate will drop by around half in the first year of owning Talemetry CRM. In other words, more candidates without a significant increase in cost.

Cost per Applicant

As recruiters source from a centralized CRM, they will be inviting these candidates to apply for specific positions. As sourcing activity escalates, you will likely experience an increase in the number of applicants per job, without an increase in costs. After all, you already own every profile in your CRM so each search and the resulting applications that come from inviting candidates to apply is basically free.

For this reason, cost per applicant typically decreases with the successful utilization of CRM.

Cost per Hire

Cost per hire is a concrete measure of your recruiting efficiency from start to finish. And your talent acquisition costs are the largest piece of the hiring lifecycle. So as your CRM continues to support processes around sourcing and managing ALL the candidates your recruiters encounter, AND gives you valuable analytics about which sources are giving you the most hires, your cost per hire should go down. You can think about your potential savings in the following areas:Download Free Predictable Hiring Handbook

  • Lower acquisition cost. Pay once to acquire a candidate. Once they are in your CRM you can nurture them and re-market jobs over time.
  • Increase source efficiency. By measuring which sources result in most hires you can reallocate candidate acquisition budget for higher efficiency.
  • Lower cost access to candidates. Growing and segmenting your candidate database over time, as all recruiters and recruiting programs funnel candidates into a central source reduces recruiter time finding and vetting candidates.
  • Source first strategy. Increasing sourcing and hiring from your centralized database results in less need to pay for external candidates through programs or agencies.
  • Increased quality of hire. Proactive sourcing and more control of which candidates are added to your CRM database can increase the quality of your candidate pool. An easily accessible, higher quality candidate pool results in increased quality of hire. Increased quality of hire results in lower turnover and faster time to productivity.

The key to realizing all this ROI lies in integrating your CRM with your ATS and with external talent sources, focusing on growing and segmenting your talent pool, increasing your sourcing from the pool and analyzing the efficiency of all programs and activities associated with hiring from that pool.

Interested in more about strategies for increasing your ability to scale your hiring capability more efficiently? Download our free eBook, Predicable Hiring here.


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Topics: CRM

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