What’s the ROI?
Shaker International offers a free Staffing Waste ROI Calculator that looks at four criteria:
- Hourly wage rate
- Employees who left or were terminated in their first 90 days, referred to as false starts
- Cost per hire
- Costs of onboarding and training
The first calculation: (hourly wage rate x number of false start employees) x 31 days. The result is the monthly lost-wage cost.
The second calculation: Cost of training for one new hire + cost of onboarding for one new hire. Multiply this by the number of false starts, and you’ll have the cost of turnover.
As an example, 99 false starters, who were paid $16 an hour would represent $392,832 in lost wages. The turnover cost for these workers is a whopping $495,000.
Many companies offer practical guides to compare the cost of hiring with and without pre-employment skills testing platforms.
For manual pre-screening the calculation is simple. Assume an hourly rate for the recruiter. Determine the amount of resumes you expect to peruse for each position, the number of phone pre-screening calls you’ll be making, and the number of face-to-face interviews you’ll conduct once you’ve narrowed down the candidates.
For these tasks, eSkill has estimated that a recruiter is valued at $40 an hour, that she or he can read 20 resumes each hour, do 3 pre-screen phone interviews each hour, and that 2 different decision makers (perhaps a recruiter followed by a department supervisor) each spend an hour with each candidate. The cost, then, for 100 resumes, 30 phone pre-screens, and interviews with 5 final candidates, is $1,000.
According to eSkill, its skills assessment product reduces the cost to just over $300 by introducing pre-screening skills testing as part of the application. This narrows the resume-read step to a total of 20, and the second-step phone process down to 10 candidates, followed by a face-to-face interview of only two of the ten.
Of course, eSkill has skin in this game, and it’s important to seek testimonial and case studies of each vendor to verify and quantify its time reductions. This calculation process is, however, a good guideline for valuation and comparison of machine versus manual assessments.
As we mentioned in part 2 of this three-part series, the manual assessment costs for hiring of developers and other technical positions is considerably greater than for other industries. When, as often happens, current IT staff must be brought into the assessment process, that $40 an hour cost for an interviewer’s time can jump to well over $100.