There have been a million studies on the statistics within the hiring process. and anyone can make an argument as to which of the KPIs is the most revealing. However, there are two ratios that actually matter the most when it comes to filling a seat:
- The Interview-to-Offer ratio
- The offer closing ratio
We had an amazing recent success story, but for some context let’s take a look at a major study done by the Applicant Tracking vendor Jobvite. They tracked 10 million job applications and found that there is an Interview-to-Offer ratio of 17% and an offer-to-close ratio of 89%. We had a major software Boston-area software company do a pilot with us who experienced a 70% Interview-to-Offer ratio.
The recruiters screened 155 software engineers over two months. Hiring managers interviewed 40 of them and made 28 offers for the 70% hit rate.
Now, you can say that is a remarkable improvement by outpacing the industry average by just more than 4x, but what does it translate to if you look at it in actual interviews? Let’s look at a real life scenario and do the math.
Let’s assume a company needs to hire 50 engineers per quarter to meet its business objectives, and they have the same industry averages referenced in the Jobvite study. This means they have to make 225 offers to get 200 annual hires. Scenario A has them using the standard approach of having recruiters screen candidates only on culture fit and send resumes to managers to decide who enters the hiring process. Scenario B has the recruiters using TechScreen to qualify candidates before sending them to the hiring manager, and they saw the same closing ratio results as the previously referenced client.
Scenario A: 225 offers/.17 Interview-to-Offer ratio = 1,324 interviews
Scenario B: 225 offers/.7 Interview -to-Offer ratio = 321 interviews
The company in Scenario A has to interview 1,003 more candidates annually than the company in Scenario B. Let’s assume a company can handle 8 on-site interviews a day. This means it would take just over 6 more months to interview those additional 1,001 candidates at that prodigious pace. If this company had the industry average of 52 days to fill a seat, their opportunity cost would be just over $1M per month.
Clearly, it is critical that a company does an effective job in qualifying technical candidates as early as possible in the process. Recruiters may not be engineers, but using TechScreen to help them qualify IT candidates with some level of predictability is the best way to avoid the heavy burden on managers to interview enough candidates to hit their business objectives.