Applicant Tracking Technology The Business Case for Investment. Prepared by: John Cridland in co-operation with Chris Keeling

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1 Applicant Tracking Technology The Business Case for Investment Prepared by: John Cridland in co-operation with Chris Keeling 1

2 Applicant tracking technology the business case for investment Contents Introduction to the authors 1. Applicant tracking technology the business case for investment - Direct sourcing - The candidate experience - The administration burden 2. Selecting applicant tracking technology based on your business recruitment profile 3. Business recruitment profile characteristics 4. Integrations 5. Ease of use 6. Future proofing 7. Making the business case from recruitment characteristics 8. Summary 2

3 Introduction to the author John Cridland is an independent interim consultant / project manager who specialises in all aspects of resourcing. During the last eight years he has worked for a range of blue chip clients in aerospace, financial services, online retail and businesses services. He has led the design and project management of resourcing transformation projects including the implementation of applicant tracking systems. John has delivered successful projects for small low volume recruitment operations, with niche functional requirements, to large multinational companies with high volume recruitment. John has implemented global SaaS (Software as a Service) based systems and also hosted solutions such as Jobtrain. Chris Keeling is the founder, owner and Managing Director of Jobtrain Ltd, one of the UK s leading providers of Applicant Tacking Systems. Chris is CIPD qualified and operated in operational HR roles with Land Rover, the NHS and the Boddington Group before entering HR consultancy. He founded Jobtrain in 1999 and continues to lead the business. In this brief document we sets out to explain in headline terms the benefits associated with implementing applicant tracking technology. In doing so we are not prescriptive and recognises that every business has a different recruitment profile forcing different challenges and requirements. It is hoped that the document will help shape the business case for applicant tracking technology without forcing recommendations for specific platforms. 3

4 Applicant tracking technology the business case for investment The ultimate goal of every business investing in their applicant tracking system and upgrading the application process is to hire and retain talented individuals. In the race for better, smarter, more efficient and cost effective recruiting processes, there are many platforms competing for your investment. Every organisation has different business objectives, every business has completely different talent acquisition and recruiting strategies. In simple terms, the type of organisation you work for, the kind of recruiting you do and even your current recruiting team will affect the tools you select. Your ultimate decision will be based on a range of qualitative and quantitative factors, because essentially you are looking to provide a candidate experience that gives a positive view of your brand whether the candidate is employed or not. Taking all of these factors into account, it can often be a daunting task trying to establish investment returns on applicant tracking technology, however this should not be the case because some of the potential savings are glaringly easy to quantify. We are often prevented from making investment decisions by the lack of information (metrics and costs) about our current process and also the uncertainty of using facility rich technology which we may not have a complete requirement for (at this moment in time). However before we start to examine the detail and the process that may be adopted, there are three clear facets that remain constant in any ROI calculation: Direct sourcing (i.e. recruiting via your organisations own means and not using a third party e.g. outsourced service, agencies etc) - facilitated by applicant tracking technology presents a significant cost saving per candidate recruited, compared to traditional agency led recruitment. This element is fundamental to the calculation because agency margins are a high proportion of your current recruitment spend (generally these range from 15% - 25%* of the candidate s annual salary). The candidate experience applicant tracking technology properly configured and implemented will have a profound effect on the candidate s perception of your business. Applicant tracking technology standardises and embeds professional, legal and compliance factors into the end to end recruitment process (consistent application response and feedback, audit history of all actions, statutory monitoring and reporting of compliance data). The administration burden recruitment is an admin hungry activity and although there is some overlap with the candidate experience, the complete resourcing cycle from authorisation, attraction, assessment, interviewing, referencing to contract management requires good project and time management. Applicant tracking systems release the administration burden with on-line structured work space, ultimately freeing up recruiter time and that of hiring managers. The overall time saving on administration tasks is in the region of 30%**. *Recruitment agency fee structure is depended upon volume and purchasing power. Most generalist agencies fall into the range of 15% to 25%. At the more senior end of the market a rate of 35% is not uncommon. **Experience gained delivering projects in the aerospace and service industry, confirms that a 30% saving on administration time is a realistic expectation. 4

5 2. Selecting applicant tracking technology based on your business recruitment profile Internal business factors will help focus the selection decision and hence support the return on investment study. Most organisations include (or evaluate the impact) some or all of the items under point 3 (below) before making a final recommendation. 3. Business recruitment profile characteristics Organisation size and geographical footprint (global locations and language) The current recruitment team profile - Structure, capability, location and number of internal resources The breadth and depth of line manager involvement in the recruitment process Daily, weekly or monthly recruitment volume Recruitment categories e.g. management, staff, graduate, temporary and permanent positions The degree of urgency that resourcing has within the business, and how critical speed of time to hire can be Desire to achieve best practice standards (authorisation, audit history and cost management) Recruitment authorisation using remote devices (tablets and smart phones) Reporting dashboards and continuous improvement metrics Reliance on recruitment consultants, annual spend and management of the PSL Maturity of the careers site and strength of the commercial brand / employment brand Careers site optimisation (Search Engine Marketing (SEM) and Search Engine Optimisation - SEO) Routes to market e.g. referral, job board and social media Legal compliance (local and across international boundaries) 4. Integrations In addition to the above it is wise to consider the broader picture of how your applicant tracking technology will be integrated (and generate additional benefits) or alternatively used as a standalone application. Examples of the most frequently used automated integrations are to: Human resource information systems Background checking and referencing Psychometric testing Job board aggregation Working hours accumulation (time sheets) 5. Ease of use It is often taken for granted that all applicant tracking systems are easy to use and intuitive, but this is unfortunately not the case. Many systems have failed to reach the expected level of cost and service benefits due to poor or badly designed recruiter interfaces and activity menus. In short if the system you look at isn t easy to use, easy on the eye and simply configured (to adapt to changing use) then there is a risk that the system becomes a white elephant and doesn t get used as it should do 6. Future proofing 5

6 Recruitment using web based applications has seen phenomenal growth over the last few years and looking at current trends and developments in social media and mobile technology this does not look like slowing down. Therefore it is important that the company you choose has a sound track record of development and a structured road-map for future proofing their technology. Also, consider how you can influence such changes in a timely fashion (when you need it, and not when the provider says you can have it) this will ensure the system keeps up with the specific requirements within your own business. In addition and I am cautious about making broad statements, but USA vendors can be very parochial and if you are a UK operation you may have difficulty in influencing future content. 7. Making the business case from recruitment characteristics If we examine some of the business recruitment characteristics in more detail, the benefits of using applicant tracking start to emerge and become clear. In most cases you can mix and match the characteristics that fit your own business recruitment profile some may or may not apply in your case or the priority might be low / high. However the list is not exhaustive but it does contain a best practice view of recruitment. 6

7 Business recruitment characteristics Characteristic Without applicant tracking With applicant tracking Organisation size and geographic footprint - global locations and language Recruitment team profile (structure, location, capability of internal resources) The breadth and depth of line manager involvement in the recruitment process Fragmented organisation and employment brand, lack of visible career mobility Process control capability unknown, with limited or no flexibility and interchange 7 Consistent brand and interconnected careers opportunities Quantifiable benefit 's Qualitative process control and management with open activity view. Highly flexible team Activity measured and reported with good metrics (continuous improvement) Difficult to achieve business consistency Adhoc reporting, difficult to quantify spend and metrics, Activity measured, and Daily, weekly or monthly limited scope for reported with good metrics recruitment volume improvement (continuous improvement) Recruitment categories e.g. Management, staff, graduate, temporary and Reactive and muddled Planned response (proactive permanent positions response to requirements recruitment) Urgency, time to hire Unknown or vague Measured and reported Recruitment policy - talent Difficult to control and Easy to configure and pooling manage search Recruitment policy - selection techniques Desire to achieve best practice standards (authorisation, audit history and cost management) Recruitment authorisation using remote devices (tablets and smart phones) Reporting dashboards and continuous improvement metrics Inconsistent application of policy, requires manual intervention Massive administration burden with huge room for error or misuse Unconnected Massive administration burden Reliance on recruitment Massive administration consultants, annual spend burden, costs spiral out of and poor management of the control, no or poor PSL performance data Maturity of the careers site and strength of the commercial / employment brand Careers site optimisation (SEM and SEO) Channel selection e.g. Referral, job boards and social media Legal compliance (local and across international boundaries) Low maturity - unlikely to attract the best talent or volume of applications Poor optimisation - jobs are not promoted or picked up by multiple aggregators Difficult to select and manage channels. No direct access to social media Potential admin burden and heavy work load. Automated part of work flow with results aligned to the candidate Automated part of work flow, with full audit history Automated part of work flow, with full audit history Dashboard and metrics available for all activities Direct resourcing (or a blended approach), costs are known and managed. If required PSL is included in workflow Candidates apply on-line with a streamlined application process Optimisation is built in as part of the configuration process. Jobs are picked up and displayed by multiple aggregators Channel prioritisation built into work flow. Volume and spend data collected. Direct access to social media and job boards either directly or through an aggregator Legal and contract requirements built into work flow, with full audit history 8.

8 Summary The case for implementing an ATS may vary greatly from company to company however, there are some common benefits, both in terms of cost and in terms of the less tangible, qualitative elements that are quite clear: Cost benefits: 1. The savings on administration time and costs are very tangible. I know that within 3 months of one company implementing Jobtrain (with which I was involved) their resourcing team was reduced by 30% due to better working processes despite handling far more volume 2. Advertising costs. Whilst an ATS isn t really about attraction, there are two key elements that help reduce advertising significantly: first; the use of talent pools. These allow you to keep candidates in a silo defined by you, searchable on the system and will enable you to keep candidates warm and engaged with your business and eager to join when the next opportunity arises. Second, a good ATS will have its web pages optimised for the Search Engines. Again if I use Jobtrain as an example, they have a client who was very concerned that van drivers (a key employment category) would not choose to apply online and the line managers were sceptical. Before implementing Jobtrain, if they placed the advert on their own website (they are a decent, well known brand) they may attract 10 or so applicants over a two week period. By using Jobtrain, they attracted 60 good calibre candidates in 5 days and had to close the advert early. This was with no advertising cost. 3. The reduction in agency fees is perhaps the easiest case to quantify. You should hopefully know what you spend at present and on what type of recruitment. If you find it hard to uncover this information then your case is already made! If you are using agencies to hire unskilled, semi-skilled, entry level and mid-tier positions in the organisation, then the ATS should eliminate the vast amount of spend on agency fees. The one area where I believe that an ATS is not always appropriate is with senior hires, where the skills of a good headhunter, who can approach, court and qualify interest in the right people is something that cannot be replicated with technology. Therefore this blended approach to recruitment has firm merits. Qualitative benefits: 1. The candidate experience. If candidates can easily apply, in a system that looks good and is easy to navigate, then it makes sense that you get more applicants. But not only that, it also reflects well on your own business giving off a sub-conscious message that we are a business that does things clearly, and likes to help you. Giving candidates the ability to start applications and come back to them later; to see where their application is at; to book themselves in for appointments; to view and accept details (including job offers) online all of these elements reflect what people want to see as part of the customer experience in the 21 st century 2. Speed to hire in some organisations this speed translates to the bottom line. However, this is not always the case but the ability to quickly identify the people who are most relevant and to process them smoothly through the recruitment system is more likely to land that talent in your business. 3. Filtering candidates this is a must. When using the internet to manage candidate applications, you will always see a rise in numbers. However, it is accepted that you also see a rise in inappropriate applicants. This is not a reason to avoid online applications though. Instead, you really should use killer questions or questions that are a must have for a particular role. Again if use an experience with Jobtrain as an example: one of their clients advertised for delivery staff and received over 5000 applicants. However, 34% of these were eliminated for consideration simply by asking the questions: are you eligible to work in the EU? and do you have a driving 8

9 licence? Now it may seem obvious to possess those two traits when applying for such a job, but never underestimate the worth of simple questions. In essence this is a play on the 80/20 principle good filter questions allows you to spend 80% of your time on the 20% of candidates who are closest match to your requirement and that produces better quality hires. 4. Information. A decent ATS will give you robust reporting on your basic activity. Not only will such reports allow you to review the effectiveness of areas of business performance such as Diversity, it also allows a simple measure of the tangibles time to hire, cost per hire, most successful sources of recruitment. There is a cost benefit to this (knowing how to spend your budget) but there is a strong qualitative element as without information, it is like driving a car without a dashboard or a sat nav. You have no idea where you are heading (other than instinct) and you don t know how far you have gone and what resources you have used. Ignorance, in this situation, is not bliss, it s a risky nightmare. 5. Buy-in introducing a new solution is often as much about change management as it is about defined benefits. In that sense it is often about winning hearts and minds. This process is helped if the technology you are using makes things easier for managers and obviously so. In addition, having a partner who is accessible, who understands recruitment and who has been through the process many times will pay dividends. Never underestimate the value of support and the quality of the people behind the product. They are key to underpinning what benefits you can expect to get out of a system. 9

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