Time and Resources Analysis of a Recruitment Exercise

I got around to thinking about the amount of effort that goes behind a recruitment exercise and I thought to pen down an article which details out a recruitment scenario and the effort / resources involved. The purpose to pen this down was to get an idea of the time, cost and people involvement per candidate. This in turn will enable us to -

1. Set expectations in terms of targets of the number of interviews one can conduct per week
2. Determine direct cost of an interview process
3. Determine the opportunity cost of an interview process
4. Improve our recruitment process and make it more efficient

People involved

• Recruitment Specialist
• Functional Head / Manager
• Interview panel (2-3 people)

Breakup of activities

Scenario Description - Senior Applicant

• This scenario assumes that we have received a resume from a job posting or an internal referral for some senior post. This means no time is spent searching for a Resume
• Since the application is for a senior post an initial pitch needs to be given via phone by the Functional Head

Activity Breakup

Time Analysis by role

• Let's assume the involvement of the following people -
  • Functional Head
  • TI Panel + PI Panel - same 2 people
• The time involvement by role is as follows

Cost Analysis by role

• Lets calculate a cost of this process for a Tech Lead Position
• The Functional head in this case would be Management
• The Interview panel would likely be two other Tech Leads
• Management CTC per hour is assumed to be $100 and Tech Lead CTC per hour is assumed to be $30 and Recruitment Specialist CTC is assumed to be $8 per hour (this is in an Indian context and is quite an approximation)

Note:

• The above assumes no cost for searching the resume
• Costs in terms of logistics, flights, and other ancillaries are not considered
• Costs in terms of memberships of job boards, placement agent fees, advertising costs, job posting costs are not considered
• Assumes perfection in terms of the above tasks with reasonable context switching time
• If we add aspects such as lunch with the candidate, tour of the office, informal time etc, the time and cost may escalate by about 15-20%
• If we convert the above to an opportunity cost calculation, then the cost would multiply by 3x to 5x

Count analysis by Role

Functional Head:

• If a functional head spends 100% of their time recruiting they can devote 2400 minutes per week (assuming a 5 day work week with 8 hours of work per day)
• This means they can accommodate about 8-9 interviews per week assuming 100% efficiency
• If they spend 50% time recruiting this translates to about 4-5 full candidate processes per week
• The actual numbers are somewhat higher since candidates can get rejected at the TI stage resulting in lower average time commitment per candidate

Recruitment Specialist:

• If a Recruitment Specialist spends 100% of their time recruiting (which they should ) - they can devote 2400 minutes per week (assuming a 5 day work week with 8 hours of work per day)
• This means they can conduct 22 full processes per week
• The actual numbers are somewhat higher since candidates can get rejected at the TI stage resulting in lower average time commitment per candidate

Interview panels:

• If an interview panel spends 100% of their time interviewing they can devote 2400 minutes per week (assuming a 5 day work week with 8 hours of work per day)
• This means they can accommodate about 11 interviews per week assuming 100% efficiency

Cost and Time Analysis based on success ratios

• The total CTC as we calculated above for one complete process is about $710
• The total manhours of effort required for one complete process is ~14 hours
• The average CTC per candidate selected atleast for a TI will be lesser since some candidates will get rejected at a TI stage. Lets assume therefore the average cost per candidate comes to around $400 (This is assuming that our resume perusal and selection processes are good enough to ensure more than half the candidates who we call for a TI are eligible for a PI)
• The below table gives our CTC per recruitment based on success ratio. Opportunity cost is much higher of course

  Success ratio	Total Time taken to find one hire	Total Cost
  1 out of 5	14 x 5 => 70 hrs / 8 => 8.75 mandays	$2000 (~ Rs 90,000)
  1 out of 10	17.5 mandays	$5000 (~ Rs 2,25,000)
  1 out of 25	43.75 mandays	$12500 (~ Rs 5,62,500)
  1 out of 50	87.5 mandays	$25000 (~ Rs 11,25,000)
  1 out of 100	175 mandays	$50000 (~ Rs 22,50,000)

• The cost increases significantly as the success ratio diminshes
• If your success ratio is 1 out of 25 it takes cumulatively 43.75 mandays of effort at a cost of $12500 to recruit that one individual. This is a prohibitive expense. Mind you this does not take into account the cost and time spent in resume searching.

Misc points

• The above costs assume average efficiency. The times take into account context switching and basic unexpected events. However the above costs do not take into account candidates not showing up, candidates backing out, unexpected delays in interview process, unexpected lengthening of interview process etc
• Costs do not incorporate lodging, travel and other ancillary expenses
• If the interview ends up being 2 rounds then the costs would further increase
• The costs are based on a senior profile which requires Management involvement. The cost would reduce if a junior profile is considered
• All the above tables and calculations are not 100% accurate but fairly indicative and give a clear insight into the cost and resources involved in a typical recruitment process

Conclusions

• It is cheaper to spend a larger amount of time in selection and pitching to attract the right type of Candidate and whittle down the Interview list to the ones that would pass our criteria. Therefore spend extra time on finding the right candidate before getting to the Interview stage
• If you cannot find '1' candidate out of every '10' that reach a TI or PI stage then you are doing something wrong on the sourcing / pitching side of the equation. Stop whatever you are doing and modify your sourcing / pitching strategy since the recruitment cost at that type of a ratio is prohibitive
• Set targets of the number of interviews that one can conduct based on a calculation of the time involved. For instance as a Functional head if you think you can devote only 40% of your time, you may only be able to conduct 3-4 full interviews per week. Keep this number in mind when you build your targets
• Work backwards from your recruitment target. For instance if you want to recruit 3 tech leads. And lets say your ratio of success is likely to be 1 out of 10. This means a total 30 full interviews. This translates to a time commitment of 8400 minutes or 140 hours or 17.5 full days. If you want to achieve this within 1 month you will need to dedicated close to 60% of your full time and attention towards this otherwise you will not be able to achieve the desired result. Further this calculation does not take into account resume searching, unexpected delays, partial rejects etc
• Do not over burden the interview panel. Typically 1-2 people in an interview panel should be adequate. Of course, if any observers who are learning our interview process need to be added to the panel, they would be counted separately