Talent network ROI, like many recruiting expenditures, can be a bit difficult to express. A talent network, in its simplest form, is the ability to engage with potential candidates outside of the standard application process.
This can be done by offering job alerts based on stated interests, or based on resumes or social profiles provided by potential candidates. Or enticing candidates to opt in by promising company news and insights into the hiring process.
But they core proposition is "tell us a little about yourself and let's see if we have an opportunity for you either now or in the future."
As with any ROI exercise, it's best to identify where potential savings or increased revenues might lie, and work from there. For talent networks, here are some places to start:
- More candidates
- Faster time to fill
- Lower cost per hire
When you offer talent networks as an option to engage candidates through your career sites, job ads, social networks or recruiting email outreach, you do so in an effort to engage more candidates than you would via a job application.
This is strategy that can be highly effective, especially for high volume positions where you need a lot of candidates to fill needs. It can also be used for highly specialized positions where your ideal candidate may be employed elsewhere and not ready to fill out an application.
So start by estimating your current Cost Per Candidate (CPC). You can do this by estimating your annual recruiting budget and dividing it by the number of candidates acquired in during the same period (applicants, recruiting event attendees, recruiter sourced candidates, etc). This number is a great overall starting point for calculating talent network ROI.
For example, let's say your rent a list of candidate contacts for an email campaign to fill some open positions. The campaign cost is $13,000 for a list of 50,000 leads. You run two campaigns. The first sends them to your job application and yields a 2% click rate (1,000 clicks) with 10% of clickers going on to complete your application. That's 100 applicants or $130/candidate.
The second campaign is the same, but asks recipient to join your talent network using their LinkedIn profile or uploading their resume. The same 1,000 clicks come through, but now 25% opt in to the talent network because the process takes significantly less time and effort.
Now you have 250 applicants and a cost per candidate of $52 instead of $130. Expressed another way, each 100 candidates now only costs you $5,200 instead of $13,000, a savings of $6,800 on a single campaign. If your talent network is capable and properly configured, you will have gathered full resume information on all these candidates. They can be ranked against open jobs and invited to apply based on their qualifications.
Case Study: A leading national retailer and Talemetry client implemented targeted talent networks to engage candidates for seasonal hiring. They were able to acquire 15,000 additional candidates in 30 days with no additional promotional budget.
Faster Time to Fill
With the additional talent network candidates, you have a larger pipeline of available candidates as jobs open up. This can speed time to fill, which speeds time to productivity. This avoids typical lost productivity cost associated with unfilled positions.
A basic way to calculate this ROI measure is to take your organization's revenue per employee measure, divide it by 365 days. The multiply it by the number of days you are able to shave off the time to fill.
Let's say your time to fill is 45 days and your revenue per employee is $200,000 per year, and the addition of a talent network decreases time to fill by 10%. The equation would be:
4.5 days X ($200,000/365), or an decrease in lost revenue opportunity cost of $2,467 per hire. If you hire 250 employees per year, that's nearly $620,000 per year in increased productivity.
Cost per Hire (CPH)
CPH driven by the Cost Per Candidate number and will most likely drop as your CPC drops. If your CPC drops by 25%, your cost per hire is likely to drop accordingly as you have less need for additional program spending to provide the needed number of candidates and applicants. If this number does not drop, it can mean that you have bottlenecks in your candidate engagement and conversion chain. These are typically things like lack of follow up with talent network candidates, poor technology for engaging talent network candidates, difficult online job applications and the like. This is why it is crucial to measure CPC and CPH.
For talent network strategies and key practices, download Talemetry's free Talent Network Strategy Snapshot.