It’s happened so gradually you might not have even noticed, but in the last 5 years, whilst the job of recruiting (internal and external) has gotten busier, the average time to hire has more than doubled.
From 28 days to 68 days.
How can this be!? Busier should mean more hires or placements right?
Especially when there are so many recruitment tech companies automating you out of a job? (that was sarcasm)
I have a theory, hear me out, and as always, feel free to disagree.
I think recruiting technology has actually taken us backwards.Tweet This
Don’t get me wrong, I’m a founder of a talent platform myself, and it’s one of the hottest spaces in tech right now, commanding breath-taking private and publicly listed valuations, and all the while, on large, in a world where we can get anything else we want on demand, recruiting tech is costing companies more and more money in wasted time and lost opportunity.
How much does this actually cost a company each year?
Well, it’s simple. Grab a napkin and pen.
First, let’s first assume every employee adds value to the company in some way. New clients, production, retaining happy clients. If they are not, then you should let them go. Immediately!
After that, dry your eyes (don’t use the napkin you’ll need it for the maths), count the number of employees you have left, then divide your companies total annual revenue (let’s say $100m) by this number (let’s say 500 employees) to give you total revenue per employee per year. $200,000.
Let’s hope you’re paying less than this in average salary or you’ve really screwed up your business (or you’re a scaling tech company and profits don’t matter right?)
Now, let’s assume your average employee churn rate per year is 20%, so you need to hire 100 people.
Those 100 roles are vacant for 68 days on average, so your companies lost revenue equals:
x 68 vacant days / 240 productive working days per year
x $200,000 annual average revenue per employee
equals $5.5 million, or roughly 5% of your total revenue.
Wowsers. That’s how much revenue opportunity you’re missing.Tweet This
Terrible when you look at it like that right?
So what happened to blow out time to hire so much?
Well, now that it’s worth $5.5 million dollars to you, here’s my theory…
A tale of 3 kings.
Recruitment tech can be grouped into three broad categories, and they are all accomplices in the greatest heist on HR budgets in the modern era.
Applicant Tracking Systems
Job Aggregators. What a great invention they were, they scrape every job board and career website around the world, and re-post the jobs in one place, for everyone who is searching to see.
Nice and convenient for job seekers.
So before, when you posted your ad and were flooded with more candidates than you could deal with, now, you’re flooded with even more candidates than you can deal with.
So to combat this, along comes a swag of new age Applicant Tracking Systems (ATS), virtually every week, with the main purpose of streamlining the flood of applicants through a frustrating multi-step form filling process into a stale database on your private servers, so applicants never get to talk to a human being.
Remember the last time you sat on an automated customer support line how angry you felt? Candidates are also likely your customers. You can check out what that is costing you here.
The industries benefitting the most from technology (think transport — Uber, and travel — Airbnb) are humanising processes, not automating them.Tweet This
I can’t remember the name of any taxi driver that ever picked me up but I literally make a new friend every time I catch an Uber.
Shout outs to you Clint
Good technology will humanise processes, not automate them, and recruiting is all about human to human interaction.
Which brings me to Networks, and on that note, why not connect to me here.
Because I want a job?, oh no. Because maybe I am trying to sell you something, or get you to like this article, or because you are connected to someone I want to sell something too. Networks are fantastic, don’t get me wrong, I meet amazing people everyday. But they are noisy places too because they are trying to monetise their user base for everything under the sun, and this gets in the way of the one important piece of data.
Knowing who is available for opportunities, without posting a job ad.
Recruiters call job boards post and pray. Post an ad and hope someone of quality will apply.
They now call networks search and spray. Spam as many people as you can and hope someone will respond. Positively.
And that, my friend, in my mind is why it now takes more than twice as long to hire someone than it did just 5 years ago.
We are too busy drowning in too many poorly matched applicants, or drowning “passive candidates” in floods of network spam, to actually have a conversation with someone, form a relationship, find out what their attributes and qualities are, and hire or place them.
So what’s the solution?
Well it’s not simple, humans are complex, and it will take a movement. It will require blowing up previously perceived views on what competitive advantage means, and it will take both us as recruiters, and everyone else as talent, to embrace a new way. But like all revolutions they can happen very fast.
What’s the solution?
I’ll tell you my thoughts in the next article. Very soon. In the meantime, please like and share this one so when I write the answer in my next piece, it’s guaranteed to pop up on your news feed.
Love you all, chat to me anytime.