TimesJob.com conducted a study on Hiring ROI. The study was conducted across 807 pan-India employers. The findings of the study reveals that 62 percent organizations admit to making hiring mistakes and 53 percent blame it on lack of proper tracking mechanisms.
Making hiring mistakes and hiring the wrong person for the job often costs organizations a lot of money and time. The study by TimesJob.com looks at why does such a large percentage makes hiring mistakes and how can it be minimized if not avoided.
The problem as per the study lies in the chunk of resumes that recruiters receive every day and the pressure recruiters have to fill a vacant position within a deadline. As per the study, 78 percent of the recruiters spend less than five minutes on reviewing a resume and hence during the whole process also makes mistakes such as unclear job descriptions, ignoring the cultural fit of a candidate, ignoring the salary-skill mismatch.
The solution to minimize hiring mistakes is to focus on hiring ROI. It can be used to identify the loopholes and also modify recruitment practices after studying the ROI report. Hiring ROI will become the benchmark to assess the success rate of hiring but the findings of the study also reveal that as many as 90 percent employers find it difficult to determine the average cost of hiring an employee and 10 percent who think it can be measures claim that it requires a lot of money and resources to do so.
"The TJinsite study reveals that there is still tremendous scope for optimizing the hiring processes in India Inc. Over 400 hiring managers have claimed a lack of tracking mechanisms to measure hiring ROI but I feel it is rather a lack of awareness - because they haven't been able to decode the metrics already available within their HR Departments," says Nilanjan Roy, Head of Strategy, Times Business Solutions.
The study suggests that it is necessary for organizations to be clear about the internal and external investments of both time and money on hiring. The major internal investments in hiring include interviews, background and reference checks and onboard training. While job postings, paying for consultancy service (if opted for), employee referral payouts and cost of relocation are the external investments.
The top nine metrics to measure hiring ROI as per the respondents are:
- Time to hire – 42%
- Sourcing channel – 40%
- Cost of hire – 36%
- Quality of hire – 30%
- Retention – 32%
- Open vacancies vs. positions filled – 25%
- Offer to acceptance ratio – 21%
- Application completion rates – 18%
- Internal vs. external hires – 13%