Congratulations on bringing new ATS onboard. Things have become much easier and faster but by how much?
For that, recruiters need to calculate hiring costs before and after ATS implementation. Have a look at some of the metrics which will help you calculate ROI of an ATS for small business.
Determine Your Hiring Costs
To begin, the first step for calculating hiring costs is to know the number of actual hires. This is done by taking a product of your number of employees currently working with you and your turnover rate. This figure is very essential in case the hiring managers are anticipating to add some new roles. To calculate the current hiring cost, you need to calculate the average cost per hire. Now, multiply these two figures to get the exact hiring cost.
Time Savings by Using ATS
The small companies that are hiring in-house have their own ATS comprising of messy spreadsheets and long email chains. A huge time and energy of HR managers and recruiters get wasted.
Let’s calculate ROI with an example. Say, one technical manager, two HR members, and one CEO are involved in every hire. HR Team spends approximately 30 hours in recruiting per week. Suppose the market rate is $20/hour. Per week rate pre-ATS is
30 hours * $20 per hour= $600 per week
With ATS, we can say the cost per week is $37 but the time spent reduces to 20 hours. That equals
20 hours * $ 20 per hour +$37 (ATS)= $437 per week
The company can easily reduce at least 30% of the total amount and time to hire.
Cost of a Bad Hire
An ATS undoubtedly helps recruiters to customize the job descriptions, enhance employer branding and get acquainted with passive and active recruiting strategies that help to bring in the top talent. But, even if we consider the worst-case scenario, the company still saves a lot of money by making better hires than following the archaic system.
The cost of a bad hire depends upon his seniority level, rank, and cost of the ATS which a company is using to find the substitute. It’s no big deal that a recruiter may have taken a bad call of hiring an employee under pressure. But with an efficient ATS, the HR team can review the candidates all-together and get an accurate grasp of the applicant’s true personality. An ideal ATS allows the recruiters to cross-check with references that the person being hired is the same as depicted on the resume.
Track Labour Hours
No matter whether the recruitment is done by a third party or in-house, there are recruitment activities such as job postings, sifting through resumes and other hiring activities that are bound to be done by employees. You can easily calculate ROI weekly, monthly and annually on these monotonous activities which could have been easily automated using ATS.
Assess Recruitment Agency Costs
Most of the small businesses outsource their hiring activities to third party professionals. The recruitment agency cost can easily be calculated by multiplying the average placement fee (for each hired employee) and the total number of hires placed by that particular recruitment agency or staffing firm. On average, after integrating ATS with the HR suite, the small businesses can save a lot more as their reliance on recruitment agency is drastically reduced.
It is always better to conduct a market analysis to understand how much savings will be made on every recruitment aspect. The recruiters should look out for similar companies that have implemented ATS. Check out their profits, major turnovers and other recruitment costs to get a fair analysis of ROI estimation.
Estimate Direct Savings
To get a tentative ROI figure, add up the hiring cost, recruitment labor cost, recruitment agency cost. Now subtract the figure received by market research. The result is not the profit but an estimated cost that can be used to determine ATS cost. This is just an estimated ROI and may or may not be exactly the same as the actual one. These are all rough estimates just to get the ball rolling.
Evaluate Indirect or Intangible Benefits
Apart from ROI, there are many indirect benefits of acquiring an ATS. An applicant tracking system significantly improves employee retention figures, raises the company’s hiring standards, increase productivity by delivering great hires, etc. Recruiting software eventually frees up labor hours which can be used by the recruiters for other productive tasks such as marketing and revenue generation.
Cost of Marketing and Advertising
We are in a job seeker’s market and the competition is getting steeper and fierce every moment. With the advent of social media, the recruiters feel the constant pressure of staying in front of the candidates.
By building talent pools using Applicant Tracking System, the companies can save tons of dollars in job marketing and recruitment advertising. Having a great talent pool will mean faster filling of roles. ATS allows the recruiters to connect with the social media platforms easily, thereby, enabling them to share their open positions. This ultimately leads to a decrease in paid job ads and a significant boost in high-quality applications.
It is evident that an ATS is worth the investment and guarantees great ROI over the years. The ATS will easily pay off for itself within a year of implementation.
Recruiteze has one of the most popular and free applicant tracking systems in the e-world. This system is a great way to make sure you’re able to acknowledge applicants, offer them next steps in the overall hiring process, list job ads on important job boards, and streamline your entire operation with just one software. No more countless spreadsheets and scattered information to keep up with! Recruiteze keeps everything you need at the touch of a button.
Recruiteze offers a cloud option with our non free applicant tracking system now that can be a great way to keep up with data, software, and anything you need, no matter where you are! You just need an internet connection and you’re ready to use our system. There’s no longer a need to have a server or system administrators that manage and operate software or servers. You can house all data in the ATS cloud and access it anytime, anywhere.
There are tons of benefits you can gain from trusting our recruitment software! Recruiteze will help your small business save time and money, become more organized and streamlined, and help you track applicants without worrying about top talent falling through the cracks. Be sure to try it for free if you haven’t used an ATS for small business recruiting and hiring!