Running Your Business

The ROI and Benefits of Recruiting Tools

Read More
Posted by June 26, 2017

In the scope of operating a successful business, are you getting the maximum benefits of recruiting tools? Very few organizations can manage the hiring and screening of candidates without at least one or more recruitment resources. Technology has made it possible to streamline many recruiting processes, making things highly efficient. However, it’s important to evaluate from time to time if your company is getting a positive return on your investment from hiring directly using internal recruitment tools, or whether a recruitment process outsourcing model could improve profitability.

Using Industry Metrics

The most common ways to recruit include hiring directly, outsourcing to headhunters or staffing agencies and using job-posting websites. Fortunately, recruitment is generally tied to metrics, which can make it possible to measure the benefits of recruiting tools and methods over time. Online recruiting resource ERE advises that recruitment metrics can be tracked over time to analyze internal hiring performance and create benchmarks. These metrics can include:

  • Number of applicants
  • Time to hire
  • Candidate sources
  • Cost per hire
  • Quality of hire

Before evaluating what works best for your organization, it’s important to understand the pros and cons of each kind of recruitment process. It’s also critical to define the goals of the organization so that hiring is managed in the most cost- and time-effective ways.

In-house Recruitment Tools Versus Outsourcing

It’s been estimated that around half of all companies outsource at least a part of their recruitment processes. The reasons are many, including lack of qualified personnel to handle recruiting, struggles with attracting and hiring for diversity and the increasing costs of recruitment advertising and screening measures. So too, companies may have a long and drawn-out series of steps that all candidates must go through pre-hire.

For the other half of organizations that opt to maintain in-house systems for hiring, there are usually higher benefits of recruitment tools to consider. There may already be a strong team of recruiters to manage things. The company may be an industry leader and a preferred place for candidates to work, making it easier to attract top candidates and gather referrals. Or the hiring process itself may be very consistent and have fewer steps.

Volume of hiring, turnover rates and availability of skilled candidates can alter processes. These factors can influence a company’s choice to use an internal versus outsourced recruitment method.

Do Third-Party Methods Provide Quality Employees?

When deciding if outsourcing to a third-party recruitment provider is beneficial to the organization, reviewing metrics are often a place to start. Time to hire is a metric often used because it can indicate the performance of an RPO solution.

According to Workable, an average time to fill for a job is 43 days. However, this must be compared against the quality of job candidates per hire metric, which indicates a strong performance of the third party. These are the number of candidates who make it past the initial screening. The higher the percentage, the better quality employee is the result.

The pros of using outsourced recruitment include:

  • Having access to a larger pool of qualified and prescreened talent
  • Faster turnaround from job requisitions to candidate placement
  • Costs for screening and background checks reduced by volume discounts of the RPO vendor
  • Reduction of liability for EEOC and other employment law breeches
  • Replacement of unsuitable candidates with some agreements

Cons can include:

  • Placement fees for direct-hire contracts
  • Higher negotiated starting wages for new hires
  • 90-day agreements to work through the agency in some cases
  • Less control over the candidate experience

Is It Worth the Time to Hire Through HR?

When an organization has a strong internal human resource team, there can be benefits of recruitment tools that exceed outplacement. Many larger organizations have an existing HR Information System that measures recruitment performance in real time. This can help them stay on top of recruiting trends and requirements better than a third-party provider. However, it may not always produce the best quality hires.

Pros can include:

  • Ability to take advantage of employee referrals and community outreach efforts
  • Direct contact with candidates throughout the entire recruitment cycle
  • Management of prehire screening and criminal background checks
  • Layers of people interviewing and assessing culture fit of candidates

Cons of internal hiring:

  • Unintentional bias during applicant screening and interviews
  • Increased risk of breaking an employment law or dealing with EEOC complaints
  • Pulls valuable resources away from other HR efforts while actively recruiting
  • Time-consuming effort and costly if a bad hire is made

Each organization has to decide for itself if using internal human resources to hire or turning to a third party for recruitment support will provide the best ROI. By monitoring data and measuring the organization against competing firms, the answer should be clear as to what direction to take.

You may also like