What’s the value of your time?
Founders and hiring executives, do you know where your business stands in hiring efficiency? You probably sense the recruitment process is costly but do you actually know how much it costs? And, more importantly, do you know where you should focus to avoid even more cost caused by mis-hires?
Currently in a hiring project, my thoughts were prompted by a recent Credit Suisse study (*) estimating 50% of Swiss SMEs report recruitment difficulties, particularly in technical expertise, management and project management skills. The study says about 90,000 SMEs are acutely affected by the shortage of skilled labor while digitalization and aging megatrends will intensify the labor market constraints in the near future.
Zooming into my current project, in a small SME, under 10 employees, hiring a commercial executive required so far about 30 hours of 2 senior executives and about the same of an associate. That’s roughly more than one week away from customers, a distraction that we can hardly afford. And we are in the middle of the process – still interviewing. And, according to the study, the worse is yet to come.
The SME world is very much a DIY world, because the alternatives are perceived expensive. To validate the perception, I tried first to get a correct view of all costs and understand how others are doing.
A global benchmarking study (**) found out it takes more than 100 candidates in engineering, design and product management to make 1 hire. Filling the top of the recruitment funnel for this group is longer and more expensive – it takes more screens, more interviews – than for other roles. And this benchmark does not consider the ‘hidden’ part of the full recruitment cycle. Most of the companies do not track costs which occur before the job postings are published. A number of activities are fragmented among different people in the company and as such remain under the radar screen, although in aggregate they come to represent a significant proportion of the ‘disgraced’ overheads cost. I am thinking here at employer branding, cross-functional administrative hiring planning and approval process, writing the job description, deciding the sourcing strategy and process (partners, referrals, job boards posting, etc.). Once all these are done, begins the screening and tracking of applications, interviewing, reference checking and so on until an offer is made.
With this is mind, I am offering for comments a 3-by-3 hiring KPI dashboard that an SME can track to monitor the full recruitment cost. Knowing where it stands helps the management to make the right decision in timing, type of hiring and sourcing strategy.
1. Time ‘decision to posting’ and ‘decision to hire’
2. Number of job description reviews
3. Number of sourcing channels
1. Conversion rate ‘screens to interviews’
2. Number of interviewers/candidate
3. Number of candidates interviewed/offer
After recruitment: (3 - 6 months integration feedback)
1. New hire
2. Hiring manager & team
3. Job design impact
Would love to have your thoughts on building a simple, cost effective SME hiring model.
(*) Success Factors for Swiss SMEs 2017, Credit Suisse, August 2017
(**)Inside the Recruiting Funnel, Lever, 2017
ide the Recruiting Funnel: