Improve Recruitment Efficiency
Improving Recruitment Efficiency should be on the top of the list for every recruitment agency and internal recruitment manager.
Any recruitment process is extremely complex as it has many moving parts which are complicated by human beings. Therefore there are many aspects of the recruitment process that impacts on the recruitment efficiency. This article (the first in a series on recruitment efficiency) aims to help you increase your recruitment efficiency, but before we do that we have to understand what efficiency is and how we measure it.
What is efficiency?
The definition of efficiency from investopedia.com is
A level of performance that describes a process that uses the lowest amount of inputs to create the greatest amount of outputs. Efficiency relates to the use of all inputs in producing any given output, including personal time and energy.
Using the above definition, efficiency is all about getting more outputs from what you are putting into your recruitment function. Think of it as Return on Your Investment.
How to measure efficiency.
To work out efficiency, divide the output by the input and multiply by 100 to turn into a percentage. Efficiency doesn’t have to be measured in %. It can be a cost per unit, weight, losses/gains etc.
So if you put in 100 units and you get out 1000 units, you have an efficiency rating of 1000%
The same is said that if you can maintain the output whilst reducing the input, you will also increase your efficiency ratio.
If you could reduce the input to 50 and still maintain the output at 1000, then your recruitment function is 2,000% efficient.
Note: what you’re looking for is a “stick in the sand” to start measuring from. It doesn’t matter if it is dollars, units or numbers, you just have to be consistent.
Recruitment Efficiency
The efficiency of your recruitment function is a little trickier to calculate. First we have to identify what the inputs are.
The inputs are your total costs associated with the recruitment function. Eg, Total employment costs, advertising costs, memberships, associations, training & support, use of agencies (if not an agency) etc.
Then we need to identify the output.
The outputs are easy if your a recruitment agency as it is the Gross Profit. If the total cost of your Sales & Marketing division is $800,000 and they produce $2,000,000 in GP, then you have a 2.5 times return. That is then your “stick in the sand” from which to start measuring.
However if you are an internal recruitment function, in many cases there is no gross profit, so we need to identify another output. That can be the number of roles, the savings from not using agencies or anything else.
Try this. If your recruitment function costs $800,000 and they generate 200 placements per year, it equates to $4,000 per placement. This then provides you that imaginary “stick in the sand” from which to measure from.
Tips
This needs to be easy to calculate otherwise you have to employ another person to do it which has just reduced your efficiency
Once organised make it a monthly task so you can keep track on it
If you are a small organisation, capture the time you invest in your recruitment and try and convert that to a dollar figure.
In the next series we will be discussing how we can improve this efficiency
Recruitment School is not a recruitment agency, we build better recruiters through unique training. To find out more go to www.recruitmentschool.com.au
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