Image result for paper napkin

I am a data wonk and have built a career around knowing how to analyze the heck out of nearly every aspect of recruiting to help tell a story a business leader understands.

There are times though, where you don’t need to over analyze the numbers to prove your point. As I like to say, ‘I’m looking for directional correctness’ to get agreement and buy in.

Back of the napkin math works especially well in conversations with leaders when the numbers your are referencing get quite large. Let me give you a practical example based of a conversation with the head of TA when we were talking about cost per hire. Specifically, we were discussing all the things that generally can go into that metric and what sometimes the business does not realize themselves around the cost of an inefficient interviewing process. Here is the back of the napkin example I have had in the past with the CEO and CHRO related to this very situation and the financial impact to the company.

Mr/s CEO and CHRO……

  1. We hire 5,000 people a year.
  2. At an average of 5:1 (Candidates interviewed to produce one hire).
  3. We have 5 different business interviewers involved on average for each candidate going through the interview process.
  4. Each business interview on average lasts 60 minutes (early screens a little less, later interviews potentially more), but lets be conservative and call it 30 minutes on average.
  5. The average fully loaded hourly rate for a business interviewer is $70, but even being conservative here as well, lets say 30 minute interviews. So that’s $35 per hour.

Mr/s CEO and CHRO……

  • 1 candidate gets 5 business interviews x 5 candidates per req = 25 interviews per req.
  • 5,000 hires (reqs) x 25 interviews on average per req = 125,000 interviews a year.
  • 125,000 x $35 per hour = $4,375,000 in time spent interviewing.

Mr/s CEO and CHRO……

If we (Recruiting and Business) could improve our throughput ratio down to 4:1 then the financial impact is a $875,000 less.

If we (Business and HR) could create a more effective interviewing and assessment framework which required 1 less business interviewer on average, then that is an additional $700,000 in savings as well.

Oh, by the way Mr/s CEO and CHRO, if we could give the business back 22 thousand interview hours going forward, what would you do with them?

Your numbers above might be better or worse in the example I gave. I encourage you, if your have not done so already, to go though this exercise to see how your numbers pan out.

I have also many times in the past used back of the napkin math for lost opportunity cost for unfilled sales roles, impact of a 5% shift in attrition, other speed and cost impact situations, but those are short stories for another day.

Need some Intelligent Advice on how to? Come visit me at McINTOSH & Co.

 

Advertisements