This post is part of a series to help small and midsized businesses navigate the process of buying an applicant tracking system. If you’re at a larger company, read this instead.
If you know you need an applicant tracking system in order to streamline recruiting at your organization, congratulations: you’ve won half the battle. Before you pop the champagne and go shopping, let’s talk about the other half: convincing the person in your organization with budget authority that this will be money well spent.
While you probably see an ATS as essential to supporting growth at your business, your C-Level decision maker will likely want to understand the return on investment (ROI).
When you hear the acronym ‘ROI’, don’t panic. Truth is, it is hard to measure ROI accurately, especially in a world of multi-touch attribution (sure, your candidate came through job board X, but where else did they learn about your company, when, and how did that impact their decision to fill out the application form when they saw your job? This is a classic marketer’s dilemma. But I digress).
The good news is: you DON’T have to predict ROI with astonishing accuracy when you present to the keeper of the budget keys. You DO have to present a rational argument, grounded in reality, including numbers (whether tied to explicit budget costs that you see in your budget spreadsheet, or implicit costs like time or productivity) you can back up. To ground your ROI in real numbers, use these questions to identify your explicit and implicit costs:
How much budget are you already spending on recruiting? (Including job boards, external recruiters, and more)
You’re probably already spending at least something on recruiting. As you scale the company, job boards, third party recruiters, and any additional tools you use all add up. Are all of these services delivering? What are you getting for your investment? How might an applicant tracking system be a better use of funds? (We’ll talk about augmenting your budget in a moment, but in truth it’s a lot easier to redeploy existing budget than argue for fresh budget.)
For instance, agencies are a strong source of hire for the most senior or hard-to-fill roles… but paying 20 percent of the first year’s salary to a third party is an expensive way to go, especially when you consider that Bersin by Deloitte estimates the average cost per hire at a little under $4,000. If you don’t have a strong system in place and you’re turning to agencies more than occasionally, becoming self-sufficient through better tools and technology can generate significant ROI.
Are your employees referring their network for open roles?
As you already know, referrals are a strong source of pre-qualified candidates. After all, eight percent of referred candidates are hired, compared to just .8 percent of applicants. An ATS makes it easier for employees to make referrals, and helps you keep on top of their progress — ultimately reducing recruiting costs.
How much time are you spending on recruiting activities?
Time is the most precious resource at small and midsized companies. Make sure you’re devoting your time to high-value activities like connecting with candidates, rather than wasting it on administrative work. Without a strong ATS, the time you spend on manual tasks like tracking candidate process, soliciting feedback, and scheduling interviews is time — and money — wasted. One Lever client ran the numbers and calculated that her team was saving one and a half hours per candidate by using Lever.
So, how do you translate that into money that could be saved by increasing your productivity?
One way to think about it: If your annual salary is $80,000 and you waste one hour per day on purely administrative work that an ATS could accelerate for you, that time is worth $10,000 a year. This argument is even more effective if a multitude of high-priority roles across the company (say, the Engineering team) also feel like they are ‘wasting time’ on administrative tasks.
How frequently are you making bad hires?
A good ATS should help you hire smarter as well as faster. Creating a robust, streamlined hiring process will enable you to spend more time screening and evaluating candidates, helping to avoid the cost of a bad hire. Any CFO or budget-conscious person should be compelled to avoid bad hires, as 41 percent of employers estimate a single bad hire costs $25,000, and 25 percent put the figure at $50,000 or more. This cost alone is enough to justify purchasing an ATS!
How does your budget compare to other departments charged with growth?
Rumor has it that almost every CEO out there considers talent a top organizational priority. At small and midsize companies, you live and die based on your ability to get excellent people in the door. So why don’t C-suites invest accordingly in talent acquisition? I recently talked to a small startup that decided to hold off on purchasing an ATS for the time being because they thought it was too expensive… despite the fact they were paying more than double the price of the ATS for a set of Salesforce licenses that were sitting unused.
This is not a slur on Salesforce – we’ve used it religiously at all of my recent companies – but it IS a knock on your ability to articulate the value you’ll see from running a tight recruiting ship. Sales needs its system of record, as does Marketing, and now Recruiting. Putting your ATS budget ask in the context of what your company pays for foundational tools in Sales, Marketing and other functions, while reminding your executives of the importance of getting recruiting right, might help them see that your ask is both reasonable and necessary.